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Gold holds ground as investors focus on U.S. jobs data

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Gold prices inched higher on Friday after a sharp drop in the previous session, even as the dollar firmed ahead of a closely watched U.S. jobs report that could offer more clarity on the Federal Reserve’s interest rate-hike path.

Spot gold was up 0.1% at $1,834.79 per ounce, as of 1008 GMT, after falling 1.1% on Thursday. Prices have gained about 0.6% so far this week.

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U.S. gold futures were steady at $1,839.70.

“Gold is probably seeing a little bit of apprehension ahead of the jobs report. It’s going to have a big impact on yields, on the dollar and therefore on gold,” said Craig Erlam, a senior market analyst at OANDA.

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The U.S. Labor Department’s nonfarm payrolls (NFP) data is due at 1330 GMT. Economists polled by Reuters forecast 200,000 jobs were added last month, easing from November’s 263,000.

If bullion “prices go below $1,818-$1,820, that would indicate gold is set for a correction after what has been a strong rally since early November,” Erlam said.

Weighing on the metal, the dollar index rose 0.4% against its rivals.

“Higher-than-expected job gains and more persistent wage pressures may be catalysts to add pressure on gold,” said IG Market strategist Yeap Jun Rong.

Data released on Thursday showed U.S. private payrolls increased more than expected in December, while the number of Americans filing new claims for jobless benefits dropped to a three-month low last week, pointing to a still-tight labor market that could force the Fed to keep hiking rates.

Few Fed officials on Thursday reiterated their fight to bring inflation back to the 2% target.

Higher interest rates dim bullion’s appeal as an inflation hedge and raise the opportunity cost of holding the non-yielding asset.

Spot silver rose 0.7% to $23.37 per ounce, while platinum eased 0.1% to $1,049.81, and palladium edged 0.1% higher to $1,746.77. All three metals were set for weekly falls. (Reporting by Arundhati Sarkar and Ashitha Shivaprasad in Bengaluru; Editing by Subhranshu Sahu)

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