Gold poised for seventh drop in eight weeks on U.S. rate hike bets

SINGAPORE (Reuters) - Gold looked set for another muted trading session on Friday but was headed for the seventh weekly drop in eight weeks as investors positioned for a looming U.S. rate hike.

FUNDAMENTALS

* Spot gold was little changed at $1,070.56 an ounce by 0044 GMT, after closing flat over the last two sessions. For the week, bullion is down 1.5 percent.

* A strong U.S. nonfarm payrolls report last week cemented expectations of a rate hike at the Federal Reserve's policy meeting on Dec. 15-16.

* The first hike in nearly a decade is expected to dent demand for gold, a non-interest paying asset.

* Fed Chair Janet Yellen next week has to decide not only whether to raise rates for the first time in a decade, but also how to assure markets on the likely path of future rate hikes. Traders currently expect the Fed to raise rates two or three times next year.

* The metal, on track for a third straight annual decline, has lost 9.5 percent of its value this year.

* A robust dollar was limiting interest in gold. The greenback rebounded from a one-month low on Thursday, boosted by rate hike expectations.

* Weakness in oil was also hurting bullion. A slide in oil could trigger fears of deflation, a bearish factor for gold, which is often used as a hedge against oil-led inflation.

* Crude prices fell 1 percent on Thursday to the lowest since 2009.

* Short positions in COMEX gold futures and options are at record highs, while assets in SPDR Gold Trust, the top bullion exchange traded fund, are at their lowest since Sept. 2008.

* Investors have boosted bets that the gold price will soon drop to $1,000 an ounce, options data show.

* Elsewhere, China has delayed the launch of its yuan-denominated gold benchmark on the Shanghai Gold Exchange to next year, two sources familiar with the matter said.

MARKET NEWS

* U.S. stocks climbed but other major equity markets were little changed on Thursday ahead of the widely expected rate hike by the Fed next week.

DATA AHEAD (GMT)

0700 Germany Wholesale price index Nov

1330 U.S. Retail sales Nov

1500 U.S. Business inventories Oct

1500 U.S. University of Michigan sentiment index Dec

(Reporting by A. Ananthalakshmi; Editing by Ed Davies)