text: * U.S. nonfarm payrolls data due 1330 GMT * Palladium on track for biggest weekly drop since Sept * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl (Updates throughout, adds LONDON dateline) By Jan Harvey LONDON, Feb 2 (Reuters) - Gold edged lower on Friday as thedollar ticked up against the euro ahead of hotly anticipatedU.S. non-farm payrolls data later, which will be closely watchedfor clues on the outlook for U.S. interest rates. The dollar rose 0.2 percent against the single currency inearly trade, though it remained on track for a seventh straightweekly loss. Its early signs of strength pressured gold, whichis priced in the U.S. unit. Spot gold was down 0.3 percent at $1,345.22 an ounceat 1030 GMT, while U.S. gold futures for June deliverywere flat at $1,353.10 an ounce. The payrolls data due at 1330 GMT is expected to show thatthe United States added 180,000 jobs in January, an increasefrom 148,000 the month before. Stronger than expected numbers could shore up expectationsfor the Federal Reserve to press ahead with interest rates hikesthis year, increasing the opportunity cost of holdingnon-yielding bullion. "If we have any news that makes it more (likely) that wehave more and faster rate hikes in the United States, of courseit will be negative for the price," Frank Schallenberger, headof commodities research at LBBW, said. "If we have very strong data from the U.S. and signs thatthe economy is even stronger than everyone thinks, it will bebad for gold in the short term, but what counts is the longterm. I think fundamentals are very strong at the moment, and$1,350 is not the end." The Fed held interest rates unchanged after its latestpolicy meeting this week but raised its inflation outlook andflagged "further gradual" rate increases. Gold is set to end this week little changed, after rising insix out of the last seven weeks and hitting its highest in 17months last week at $1,366.07. On the wider markets, world stocks were set to post theirbiggest weekly drop since late 2016 as talk of central bankpolicy tightening and expectations of higher inflation boostedborrowing costs globally. Holding gold offers a degree of insurance if the broadermarket suffers a correction, ScotiaMocatta said in a monthlyreport this week. "Record-setting global equities may well startto wobble if inflation starts to pick up, or if bondyields/interest rates continue to rise," it said. Silver was 0.7 percent lower at $17.11 an ounce,while platinum was down 1.4 percent at $991.60 andpalladium was up 0.6 percent at $1,042.72. After hitting record highs this month, palladium fell to itslowest since Dec. 18 at $1,013.72 on Thursday and is on trackfor its biggest weekly drop since early September, down 4.8percent. (Additional reporting by Nallur Sethuraman in Bengaluru;Editing by Alison Williams)
words: * U.S. nonfarm payrolls data due 1330 GMT * Palladium on track for biggest weekly drop since Sept * GRAPHIC-2018 asset returns tmsnrt . rs / 2jvdmXl Updates throughout adds LONDON dateline By Jan Harvey LONDON Feb 2 Reuters Gold edged lower on Friday as thedollar ticked up against the euro ahead of hotly anticipatedU . S non-farm payrolls data later which will be closely watchedfor clues on the outlook for U.S. interest rates The dollar rose 0.2 percent against the single currency inearly trade though it remained on track for a seventh straightweekly loss Its early signs of strength pressured gold whichis priced in the U.S. unit Spot gold was down 0.3 percent at $1,345.22 an ounceat 1030 GMT while U.S. gold futures for June deliverywere flat at $1,353.10  an ounce The payrolls data due at 1330 GMT is expected to show thatthe United States added 180,000 jobs in January an increasefrom 148,000 the month before Stronger than expected numbers could shore up expectationsfor the Federal Reserve to press ahead with interest rates hikesthis year increasing the opportunity cost of holdingnon-yielding bullion If we have any news that makes it more likely that wehave more and faster rate hikes in the United States of courseit will be negative for the price Frank Schallenberger headof commodities research at LBBW said If we have very strong data from the U.S. and signs thatthe economy is even stronger than everyone thinks it will bebad for gold in the short term but what counts is the longterm I think fundamentals are very strong at the moment and$1 350 is not the end The Fed held interest rates unchanged after its latestpolicy meeting this week but raised its inflation outlook andflagged further gradual rate increases Gold is set to end this week little changed after rising insix out of the last seven weeks and hitting its highest in 17months last week at $1,366.07 On the wider markets world stocks were set to post theirbiggest weekly drop since late 2016 as talk of central bankpolicy tightening and expectations of higher inflation boostedborrowing costs globally Holding gold offers a degree of insurance if the broadermarket suffers a correction ScotiaMocatta said in a monthlyreport this week Record-setting global equities may well startto wobble if inflation starts to pick up or if bondyields / interest rates continue to rise it said Silver was 0.7 percent lower at $17.11 an ounce while platinum was down 1.4 percent at $991.60 andpalladium was up 0.6 percent at $1,042.72 After hitting record highs this month palladium fell to itslowest since Dec. 18 at $1,013.72 on Thursday and is on trackfor its biggest weekly drop since early September down 4.8percent Additional reporting by Nallur Sethuraman in Bengaluru Editing by Alison Williams