LONDON/BENGALURU (March 10): Gold fell to its lowest in more than five weeks on Friday, as traders took to the sidelines ahead of U.S. payrolls data, which will be closely watched for clues on the outlook for U.S. monetary policy.

Growing expectations that the U.S. Federal Reserve will raise interest rates this month, following a better than expected ADP payrolls report on Wednesday have pushed gold down 3% this week, potentially its biggest weekly loss in four months.

The metal hit a low of US$1,194.55 an ounce on Friday, after slipping below US$1,200 an ounce in the previous session for the first time since Jan 31. 

Spot gold was down 0.38% at US$1,196.19 an ounce at 1047 GMT, while U.S. gold futures for April delivery were down US$6.80 an ounce at US$1,196.40.

"We had a really quite phenomenal number in the ADP payrolls on Wednesday, and when you get such a big move in private payrolls, it would be highly surprising if the official numbers moved lower," Mitsubishi analyst Jonathan Butler said. 

A Reuters survey of economists predicted that non-farm payrolls probably rose by 190,000 jobs last month.

Fed Chair Janet Yellen said last week the central bank was poised to lift rates provided jobs and inflation data held up, comments seen as cementing plans for an increase at the Fed's March 14-15 meeting. 

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

"If we see a very good payroll number today and also hawkish comments from the Fed next week, we could break out of this longer-term downtrend in fixed income, in the 10-year yield, and that is going to change the game as far as real rates are concerned," Butler said. "That is going to have a negative impact on gold."

Pointing to softening investor appetite, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares fell 2.7 tonnes on Thursday, bringing the total outflow for the week so far to 6.5 tonnes.   

Among other precious metals, silver was down 0.41% at 16.88 per ounce, after hitting its lowest since Jan 27 at US$16.78. Palladium was down 0.37% at US$744 per
ounce.

Platinum was up 0.58% on Friday at US$937.70, bucking the bearish trend among precious metals. However, platinum has already fallen nearly 6% this week, having
earlier touching its lowest since Jan 4 at US$928.50.