Gold dips to two-week low ahead of U.S. jobs data

By A. Ananthalakshmi

SINGAPORE (Reuters) - Gold fell to a two-week low on Friday, extending losses into a sixth straight session as investors positioned themselves ahead of U.S. jobs data that could help gauge when the Federal Reserve will raise interest rates.

Economists polled by Reuters expect Friday's nonfarm payrolls report to show U.S. employers hired 203,000 workers in September, improving from August's 173,000 increase.

A strong report would support views that the economy was recovering strongly enough for the Fed to raise rates this year, which in turn could hurt non-interest-paying gold.

Spot gold had eased 0.4 percent to $1,108.70 an ounce by 0649 GMT, after dipping to $1,107.55 earlier in the session - the lowest since Sept. 16. It has lost nearly 3 percent for the week, its biggest such decline since the week ended July 24.

"Our call for gold prices to touch $1,050 at year-end is still very much intact on the grounds for a Fed fund rate hike before the year is up," said OCBC analyst Barnabas Gan.

The Fed will hike rates by 25 basis point hike this year on the back of a recovery in the economy, he said.

The U.S. central bank has said the timing of a rate hike would be data dependent. Higher rates could dent demand for non-interest-paying gold, while boosting the dollar.

Wednesday's robust ADP data on U.S. private-sector jobs, bolstered expectations that the nonfarm payrolls report would also be strong.

Other data on Thursday showing a slowdown in manufacturing activity failed to provide any relief for gold, as traders were reluctant to place big bets ahead of the jobs report.

Among other precious metals, platinum slumped to $891 an ounce on Friday, its lowest since December 2008. It is down 5 percent for the week, its biggest weekly drop in year.

Platinum has been hit after revelations that Volkswagen falsified U.S. vehicle emission tests, which some believe could affect demand for diesel cars. Platinum is widely used in auto catalysts, particularly for diesel engines.

Meanwhile, palladium was trading near a three-month high of $679.50 reached in the prior session. It was headed for its fourth straight weekly gain, its longest such winning streak since June-July 2014.

The metal, chiefly used in catalysts for gasoline engines, was boosted by data showing strong car sales from major automakers. It has also benefited from views that demand for gasoline cars would increase after Volkswagen's scandal.

(Reporting by A. Ananthalakshmi; Editing by Joseph Radford and Anand Basu)