* US services sector slows in December
* Nonfarm payrolls increase in December
* Falling domestic prices spur Indian demand
Jan 5 (Reuters) - Gold held steady on Friday after swinging up and down a percentage point on mixed U.S. economic data, but bullion eyed its first weekly decline in four weeks on an overall stronger dollar and higher Treasury yields.
Spot gold rose 0.1% to $2,044.21 per ounce by 3:15 p.m. EST (2015 GMT) after falling and then rising by about 1% earlier in the session. Prices were set to shed nearly 1% for the week.
U.S. gold futures settled mostly unchanged at $2,049.80.
Official data showed U.S. employers hired more workers than expected in December, but separate data from the Institute for Supply Management (ISM) indicated that the U.S. services sector slowed considerably last month.
"First, the nonfarm payrolls data came in stronger than expected, due to which we saw some pressure applied to gold ... However, on the heels of that we received some weaker-than-expected ISM data and as a result we've seen a turn in trend," said David Meger, director of metals trading at High Ridge Futures.
Both the U.S. dollar and 10-year Treasury yields hit their highest levels in three weeks, heading for their best weeks since July and October, respectively.
"With the U.S. Federal Reserve pivoting towards rate cuts, we see the guessing game with regards to the number of rate cuts being a major driver of volatility in the months ahead," Saxo Bank's head of commodity strategy, Ole Hansen, said in a note.
The market expects a chance of about 67% for a Fed rate cut by March, according to the CME FedWatch tool.
Lower interest rates decrease the opportunity cost of holding non-yielding gold.
On the physical front, gold buying in major consumer India rose this week, as domestic prices fell back from record highs.
Silver rose 0.8% to $23.17 per ounce, but braced for its second weekly fall, and platinum gained 0.5% to $961.53, but headed for its worst week in eight weeks.
Palladium fell 0.9% to a three-week low of $1,027.11 in its ninth consecutive session of declines and was down 6.4% on the week.
(Reporting by Deep Vakil, Anjana Anil, Sherin Varghese and Ashitha Shivaprasad in Bengaluru Editing by Pooja Desai and Matthew Lewis)
