Gold firm but heading for worst week since Dec. on rate hike jitters

(Reuters) - Gold prices held firm on Friday after falling more than one percent in the previous session, but gold was on track for its first drop in five weeks and weakest level since December on expectations of U.S. Federal Reserve rate hike in March.

FUNDAMENTALS

* Spot gold was mostly unchanged at $1,234 per ounce at 0048 GMT. The metal had its worst session since Dec. 15 on Thursday, when it fell over 1 percent to touch over one-week low of $1,230.58.

* U.S. gold futures rose 0.2 percent to $1,234.90.

* The dollar index , in which the gold is priced, fell 0.1 percent to 102.070.

* The number of Americans filing for unemployment benefits fell to near a 44-year low last week, pointing to further tightening of the labour market even as economic growth appears to have remained moderate in the first quarter.

* A surge in business and consumer confidence during President Donald Trump's first weeks in office has helped push the Federal Reserve toward its first sustained series of interest rate hikes in more than a decade, despite a dearth of firm policies from the administration.

* The European Central Bank will stay in the background through upcoming elections in key European countries and is only likely to signal a shift away from its ultra-easy monetary policy toward the end of this year or early next, a Reuters poll found.

* Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.21 percent to 845.32 tonnes on Thursday from Wednesday.

* CME on Thursday lowered margins for COMEX 100 gold futures (GC) and COMEX 5000 silver futures (SI) for March 2017.

* ABN Amro on Thursday raised average 2017 and 2018 gold price forecasts to $1,248 and $1,350 per ounce.

* Commerzbank revised its first half 2017 gold price forecast upwards to $1,250 per ounce while confirming its year-end forecast at $1,300 per ounce.

* Four more financial firms, including Bank of China International, have agreed to participate as clearing members in the London Metal Exchange's new suite of precious metals contracts when they launch on June 5, the LME said on Thursday.

DATA AHEAD (GMT)

0145 China Caixin services PMI Feb

0700 Germany Retail sales Jan

0850 France Markit services PMI Feb

0855 Germany Markit services PMI Feb

0900 Euro zone Markit services PMI final Feb

1000 Euro zone Retail sales Jan

1500 U.S. ISM-non manufacturing PMI Feb

1800 Federal Reserve Chair Janet Yellen speaks on U.S.

economic outlook before the Executives Club of Chicago

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph Radford and Michael Perry)