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NEW YORK: Gold prices slipped on Friday, pressured by a firmer dollar and higher U.S. Treasury yields as upbeat U.S. jobs data bolstered the case for rate hikes by the Federal Reserve.

Spot gold was down 0.2% at $1,800.40 per ounce by 09:37 a.m. EST (1437 GMT), after hitting a one-week high earlier in the session. U.S. gold futures fell 0.1% to $1,802.40.

An extremely strong jobs report could prompt the Fed to raise interest rates faster and higher than prior market expectations, said David Meger, director of metals trading at High Ridge Futures.

U.S. nonfarm payrolls increased by 467,000 jobs last month, data from the Labor Department showed on Friday, while December data was revised higher to show the creation of 510,000 jobs.

Following the surprise data, benchmark 10-year yields hit their highest since January 2020, while the dollar gained and made bullion expensive for overseas buyers.

Gold prices have been trading around $1,800 an ounce level since slipping to a 1-1/2-month low last week after the Fed signalled an interest rate hike in March.

With U.S. inflation expected to peak this quarter and interest rates to increase, gold could decline to $1,650 an ounce by the year-end, said UBS analyst Giovanni Staunovo.

Gold is considered a hedge against inflation, but interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

However, gold is set to gain about 0.5% this week as the greenback is set for its worst weekly decline since November 2020.

“Tracking ETF flows suggests little such interest in the yellow metal, whereas the Fed’s decisively hawkish tone is keeping capital from sustainably flowing into the yellow metal,” TD Securities said in a note.

Silver fell 0.1% to $22.38 per ounce, platinum dropped 1.2% to $1,020.98 and palladium declined 1.1% to $2,300.42.

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