Gold steadied on Friday ahead of crucial US employment data, but was set to post its biggest weekly loss in almost two months after steep gains at the start of the year. A strong US jobs number for January would strengthen expectations for the Federal Reserve to hike interest rates by mid-year, denting the appeal of non-interest yielding assets such as gold. But weaker data could buoy bullion prices.
"A significantly lower job creation could support gold if it results in changes in the timing of Fed rate-hike expectations," said HSBC analyst James Steel. Spot gold was up 0.2 percent at $1,267.20 an ounce by 0650 GMT. The metal has lost 1.2 percent so far this week, which would be its largest fall since the week ended December 19. Gold gained 8.4 percent in January, its biggest monthly rise in three years, helped by a sharp slowdown in US fourth-quarter economic growth. US gold for April delivery edged up 0.4 percent to $1,267.80 an ounce.