PRECIOUS-Gold prices firm, but set for 3rd weekly fall on Fed rate hike prospects

    * Dollar eyes fifth straight weekly gain
    * Gold down about 0.8% for the week
    * U.S. jobs data due at 1230 GMT

 (Updates prices)
    By Eileen Soreng
    May 6 (Reuters) - Gold prices were on track for a third
straight weekly decline on Friday as investors fretted over the
prospects of aggressive rate hikes from the U.S. Federal
Reserve, though a slight pullback in dollar helped the precious
metal to tick higher on the day.
    Spot gold        rose 0.3% to $1,883.31 per ounce by 1147
GMT, but was down 0.7% for the week. U.S. gold futures       
were up 0.4% at $1,883.50.
    The dollar index        slipped 0.4% after hitting a fresh
20-year high, making gold less expensive for those holding other
currencies. However, the U.S. currency was headed for a fifth
weekly gain, while the benchmark U.S. Treasury yield            
held near the key 3% level.             
    "Gold's got some pretty strong headwinds, notwithstanding
serious inflation, from both the dollar index being up to
multi-decade highs and the 10-year U.S. Treasury back above the
3% level," independent analyst Ross Norman said. 
    European stocks headed for their worst week in two months as
investors expect bigger interest rate hikes will be needed to
rein in inflation.      
    While gold is perceived as an inflation hedge, higher U.S.
interest rates lift the opportunity cost of holding zero-yield
    The Federal Reserve on Wednesday raised its benchmark rate
by half a percentage point, the most in 22 years, but Chairman
Jerome Powell explicitly ruled out raising rates by
three-quarters of a percentage point in a coming meeting.
    "Gold was unable to capitalize on Powell's less hawkish than
expected message this week, with bullion bulls aware that U.S.
rates are bound to rise anyway," Han Tan, chief market analyst
at Exinity, said.
    "Should Friday's non-farm payrolls point to a resilient U.S.
jobs market that paves the way for more Fed policy tightening,
that could strengthen the cap on gold's upside." 
    Silver        fell 0.5% to $22.40 per ounce, platinum       
dropped 2.6% to $955.26 and palladium        was also down 2.6%,
to $2,130.83.


 (Reporting by Eileen Soreng and Seher Dareen in Bengaluru
Editing by Tomasz Janowski and Susan Fenton)