Gold poised for drop

Singapore

Gold drifted lower on Friday and was headed for the seventh weekly drop in eight weeks as investors positioned for a likely US rate hike.

A strong US nonfarm payrolls report last week cemented expectations of a rate hike at the Federal Reserve's policy meeting on Dec. 15-16.  The expected hike would be the first in nearly a decade and will dent demand for gold, a non-interest paying asset.

Spot gold fell 0.2 percent to $1,069.50 an ounce by 0646 GMT, after closing flat over the last two sessions. For the week, bullion fell 1.6 percent.

"The path of the euro-dollar may be the most visible influence on gold, at least until the Fed meeting," said HSBC analyst James Steel.

"If the Fed raises rates, gold may be in for a knee-jerk reaction lower," said Steel, adding that the metal will be range bound until next week's meeting.  A robust dollar was limiting interest in gold. The greenback rose for a second session on Friday, extending a rebound from a one-month low on expectations of a rate hike.