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Gold price near one-week low as US rate hike bets boost dollar

Gold hovered near a one-week trough on Friday and was set to snap a three-week rally, pressured by renewed expectations for a U.S. rate hike this year despite recent soft economic data.

Singapore: Gold hovered near a one-week trough on Friday and was set to snap a three-week rally, pressured by renewed expectations for a U.S. rate hike this year despite recent soft economic data.

FUNDAMENTALS

* Spot gold was little changed at $1,194.71 an ounce by 0017 GMT, after slipping to a session low of $1,192.30 on Thursday. Bullion is down 1.3 percent so far this week following a three-week rise.

* U.S. gold for June delivery was also nearly flat at $1,194.60 an ounce.

* Bullion prices were back to levels where they were before the release of much softer-than-expected U.S. employment data last week. That lifted gold to a seven-week high above $1,220 on Monday as investors pared back forecasts for a U.S. rate increase following the dismal jobs number.

* The non-interest bearing metal took a hit from comments from Federal Reserve officials which suggested that a rate hike in June could still be in play, along with minutes of the Fed`s March meeting that opened the door to an increase during that month.

* Gold prices could drop to five-year lows this year, extending two years of decline before they rebound in 2016 on a demand recovery in Asia, GFMS analysts at Thomson Reuters said.

* Gold demand in the world`s biggest consumer India risks falling for a second straight year in 2015, as millions of Indian farmers hit by erratic weather and falling commodity prices trim purchases.

MARKET NEWS

* The dollar held at three-week highs against a basket of major currencies as the hapless euro extended its decline and disappointing trade data knocked sterling.

* U.S. crude oil held above $50 a barrel on strong German economic data and uncertainty about negotiations on Iran`s nuclear programme.