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NEW YORK/LONDON (Reuters) - Gold fell for the sixth straight session and reached a five-week low on Thursday, with analysts expecting further losses as investors become increasingly certain that U.S. interest rates will rise this month.
Spot gold XAU= was down 0.5 percent at $1,202.11 an ounce by 3:01 p.m. EST (2001 GMT) after dropping to $1,201.02, its weakest since Feb. 1.
U.S. gold futures GCcv1 settled down 0.5 percent at $1,203.20.
Strong U.S. economic data and comments by Federal Reserve officials have reinforced expectations of a March U.S. rate hike.
Higher interest rates typically pressure gold prices because they raise the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
"You could see the price continuing to drop as more news comes out confirming what the market already knows," said Bernard Dahdah, metals analyst at Natixis.
"I wouldn't be surprised to see gold drop below $1,200 in the next few days."
February's U.S. private sector job growth numbers, released on Wednesday, showed the biggest jump for more than a year.
Investors are awaiting non-farm payrolls data on Friday for further clues on the strength of the U.S. economy after Federal Reserve Chair Janet Yellen said last week that the central bank was poised to lift rates, provided that jobs and inflation data held up.
Her comments were seen as cementing plans for an increase at the Fed's March 14-15 meeting. [FED/DIARY]
"If the (non-farm payroll) data does come in better than market expectations, it will drag gold prices further," said OCBC analyst Barnabas Gan.
"But with fund futures fully pricing in the rate hike story, I'd presume gold will just be supported at the $1,200 handle into next week."
Interest rate futures FFH7 implied that traders had put the chance of a rate hike next week at 86 percent FFH7 on Wednesday, compared with 82 percent at Tuesday's close, according to CME Group's FedWatch program.
"In gold, fundamentals on balance indicate a moderate short position," UBS Chief Investment Office Wealth Management said in a note.
"In additional to our short model position, we have a long gold position under macro-scenario trades, resulting in an overall net long gold position."
In other precious metals, silver XAG= fell 1.6 percent to $16.95 an ounce, having touched $16.91, the lowest since Jan. 27.
Platinum XPT= dropped 0.9 percent to $935.90 after hitting a low of $929.25, the weakest since Jan. 4, while palladium XPD= slid 2.8 percent to $747.20, after falling to $744.60, its lowest since Feb. 6.
Additional reporting by Arpan Varghese in Bengaluru; Editing by Ruth Pitchford and Richard Chang