Gold heads for biggest weekly loss

Singapore - Gold is on course for the biggest weekly loss in two years as expectations increase that the Federal Reserve is on the verge of raising US interest rates, buoying the dollar and pushing bullion toward the lowest level in four months.

After an eight-day losing run, bullion for immediate delivery was little changed at $1 255.03 an ounce at 3:10 in Singapore, according to Bloomberg generic pricing.

The metal fell 1% to close at $1 254.38 on Thursday, the lowest level since June 7, and it is down 4.6% this week, the most for a week since October 2014.

Gold has tumbled as traders see increasing odds for higher US borrowing costs, damping the appeal of non-interest bearing bullion.

Filings for US unemployment benefits fell last week to the second-lowest since 1973, data showed on Thursday, spurring optimism Friday’s payrolls report will reinforce the picture of a strong labour market.

A close below $1 248 would open up a clear move to $1 200 and mark an "emotional end" to the week for bulls, according to Jeffrey Halley, a market strategist at Oanda Asia Pacific.

Dollar’s strength

"Gold is attacking significant support," Singapore-based Halley said in an e-mail. "The general strength of the dollar continues to weigh on precious metals as the market increasingly prices in the likelihood of a Fed rate hike in December.

A good non-farm payrolls number tonight - an increase of 200 000 - will all but confirm a December hike in the eyes of the street."

Friday’s payrolls report is forecast to show the US added about 172 000 jobs in September. This week, Fed Bank of Richmond President Jeffrey Lacker urged the central bank to raise rates.

The probability of a move in December has climbed to 64% as of Thursday from 53% a week ago, according to futures data compiled by Bloomberg.

Still, a strategic buying opportunity may open up in gold should prices drop substantially below $1 250, Goldman Sachs Group said in a report received on Friday.

While the drop over the past month has been in line with the bank’s outlook, there could be a case for purchases if the sell-off deepens, according to analysts including Jeffrey Currie.

In other precious metals:

Spot silver fell 0.4%, platinum lost 0.1% and palladium dropped 0.3%.