Gold set for first weekly gain in three as US dollar, yields slip

* Weaker labour data could translate to upside in gold- analyst

* US non-farm payrolls data due at 1230 GMT

* Gold to hit another record high this year - Metals Focus

June 7 (Reuters) - Gold prices held steady on Friday, and were on track for their first weekly gain in three as traders stepped up bets that the U.S. Federal Reserve will start cutting rates soon, sending the dollar and Treasury yields lower.

Spot gold was little changed at $2,377.13 per ounce as of 0321 GMT. Bullion gained about 2% so far this week.

U.S. gold futures rose 0.2% to $2,396.00.

The dollar hovered close to an eight-week low and benchmark 10-year U.S. Treasury yield fell to as low as 4.275% on Thursday, its lowest since April 1, making bullion more attractive for investors.

"Gold prices have been holding up lately, as declining bond yields and a struggling U.S. dollar has offered a supportive environment for the yellow metal," said IG market strategist Yeap Jun Rong.

Markets now look forward to the U.S. non-farm payrolls data at 1230 GMT, with the possibility that jobs growth comes in below the 185,000 median forecast of economists.

"It may have to take a significant downside surprise in labour conditions to convince the Fed for an earlier rate cut, given that inflation progress has broadly stalled around the 3% level. Any weaker labour market data could translate to upside in gold prices," Jun Rong said.

A run of weaker macro data this week added to signs that inflation was cooling and that the Fed would start cutting rates as early as September.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Gold prices are expected to hit another record high this year despite a dip in physical demand, consultancy Metals Focus said.

A cocktail of factors from U.S. rate cut expectations, central bank buying to geopolitical tensions underpinned bullion's demand to hit a record high of $2,449.89 on May 20.

Spot silver fell 0.4% to $31.16 per ounce, platinum was up 0.3% at $1,006.15 and palladium lost 0.4% to $925.75.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Janane Venkatraman and Varun H K)