Gold heads for weekly fall on hawkish Fed talk

Gold was set for a third straight weekly drop on Friday, weighed down by signals from Federal Reserve officials that the central bank could end its pandemic-era asset purchases and raise interest rates faster than expected to combat surging inflation.

FUNDAMENTALS

* Spot gold rose 0.1% to $1,771.04 per ounce by 0056 GMT after hitting its lowest in nearly a month on Thursday. The metal has declined 1.3% so far in the week.

* U.S. gold futures gained 0.5% to $1,770.90.

* U.S. Federal Reserve Bank of Atlanta President Raphael Bostic told the Reuters Next conference on Thursday it would be appropriate to end the central bank’s bond-buying programme by the end of March to allow the Fed the option to raise rates to deal with inflation.

* Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest bearing gold.

* U.S. Treasury Secretary Janet Yellen told Reuters Next it was the Fed’s job to ensure that the current run of high inflation does not evolve into a damaging and long-lasting “wage-price spiral”.

* Euro zone inflation remains temporary, two key European Central Bank policymakers argued on Thursday, even as U.S. officials made the case this week for abandoning the use of “transitory” to describe current price pressures.

* The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to tightening labour market conditions, while layoffs tumbled to the lowest level in 28-1/2 years in November.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell about 0.5% to 986.17 tonnes on Thursday from Wednesday.

* Spot silver rose 0.1% to $22.40 an ounce. Platinum fell 0.3% to $934.99, while palladium increased 0.1% to $1,784.09.

DATA/EVENTS (GMT) 0900 EU Markit Serv, Comp Final PMIs Nov 1330 US Non-Farm Payrolls Nov 1500 US ISM Non-Mfg PMI Nov