* Investors also looking to US non-farm payroll data at 1230
* Gold, silver, platinum heading for first weekly decline in
* Palladium may register best week in over two months
By Vijaykumar Vedala
June 2 Gold fell on Friday to hit its lowest in
a week, with stock markets climbing and the dollar firming after
upbeat U.S. private sector job figures appeared to boost the
prospects for an interest rate hike this month.
Investors will be looking for further clues on the timing of
rate rises in U.S. non-farm payroll data due later in the day.
Spot gold had dropped 0.3 percent to $1,262.10 per
ounce by 0738 GMT. It earlier touched its weakest since May 26
at $1,258.60. Gold has fallen 0.4 percent for the week and could
register its first weekly decline in four weeks.
U.S. gold futures fell 0.5 percent to $1,264.40 an
"A stronger dollar and firming U.S. equity markets, along
with weaker oil are all headwinds that could hamper gold's
advance over the short-term," said INTL FCStone analyst Edward
"But on the flip side, the fact that prices have not dropped
significantly so far suggests that funds continue to buy the
U.S. factory activity ticked up in May after slowing for two
straight months and private employers stepped up hiring,
suggesting the economy is regaining speed after struggling at
the start of the year.
Federal funds futures implied traders saw a 96 percent
chance the U.S. central bank would increase key overnight
borrowing costs by a quarter point, to 1.00-1.25 percent, at its
June 13-14 policy meeting, CME Group's FedWatch program showed.
Fed Governor Jerome Powell said the U.S. economy was
"healthy" and the central bank should continue to edge towards a
more normal footing after nearly a decade of crisis-era
Higher interest rates put pressure on gold prices by
increasing the opportunity cost of holding non-yielding bullion.
"We are bearish on gold short-term into the Fed hike. There
is good room to fallback to $1,200 within the next three
months," said Dominic Schnider at UBS Wealth Management in Hong
"The world economy is still in good shape, people are
risk-on, inflation is leveling off, there is no real big
inflation threat anymore, policy is normalizing still."
In the wider markets, global stocks hit a record high on
Friday and Asian markets rose to their best levels in more than
two years, while the dollar marked a one-week high against the
Among other precious metals, palladium touched its
strongest since May 1 at $828.90 earlier in the day. It has
gained 4.6 pct this week and is on track for its best weekly
performance since the week ended March 24.
Silver was down 0.7 pct for the week and platinum
2.6 percent. Both are heading for their first weekly
decline in four.
(Reporting by Vijaykumar Vedala in Bengaluru; Editing by Joseph
Radford and Amrutha Gayathri)