* SPDR Gold holdings down 0.34 pct on Thursday
* SPDR Gold holdings down nearly 9 pct since November
* Traders see 98 pct chance of U.S. rate hike in December (Adds comment, updates prices)
By Swati Verma
BENGALURU, Dec 9 (Reuters) - Gold edged lower on Friday and was headed for a fifth straight weekly decline, weighed down by a stronger U.S. dollar and expectations of a Federal Reserve rate hike next week.
Spot gold XAU= had declined 0.1 percent to $1,169.51 an ounce by 0647 GMT, and was down about 0.6 percent for the week.
U.S. gold futures GCcv1 shed 0.1 percent to $1,171.50 per ounce.
"Because of a stronger dollar and prospects of another rate hike, gold prices are hovering around these levels," said Barnabas Gan, an analyst at OCBC Bank in Singapore.
Gan said $1,150 was a quite strong support and added that: "If there persists strong growth prospects into 2017 due to higher oil prices ... gold prices may trend lower towards the end of the year."
The dollar .DXY held large gains against the yen and euro early on Friday. USD/
"We see gold resuming its downtrend, especially heading into next week's Fed meeting," INTL FCStone analyst Edward Meir said in a note.
"Although a rate increase is very much discounted, we suspect the markets will still be rather nervous about policy wording and on any hint the Fed could give about future rate increases."
The Fed is expected to hike rates at its policy meeting next Tuesday and Wednesday.
Interest rates futures FFZ6 , FFM7 implied traders saw a 98 percent chance the Fed would raise interest rates by a quarter point next week, and about a 50 percent chance it would raise rates by at least another quarter point by June 2017, according to CME Group's FedWatch program.
"A rate hike is almost universally expected. This should take some of the sting out of the impact on gold when a hike is officially announced," HSBC analyst James Steel wrote in a note.
Expectations of further U.S. interest rate increases lower demand for the non-interest-paying bullion.
The number of Americans filing for unemployment benefits fell from a five-month high last week, pointing to labour strength that underscores the economy's sustained momentum and reinforcing the case for a Federal Reserve rate increase. of the SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, fell 0.34 percent to 860.71 tonnes on Thursday. SPDR holdings have fallen nearly 9 percent since November and are on track for a fifth straight week of losses. GOL/ETF
Elsewhere, silver XAG= was down 0.2 percent at $16.97 an ounce and platinum XPT= fell half a percent to $934.20.
Palladium XPD= was steady at $736 an ounce, after reaching its lowest since Nov. 18 in the previous session.