Jan 7 (Reuters) - Gold inched up on Friday, hovering close to a two-week low hit in the previous session, after the chief of the World Health Organisation (WHO) said the Omicron variant cannot be considered "mild", while stronger yields capped bullion"s gains. FUNDAMENTALS * Spot gold was up 0.2% to $1,791.73 per ounce by 0100 GMT. U.S. gold futures was up 0.1% to $1,791.70. * The precious metal was all set for its worst weekly fall since late November, down about 2%. * The more infectious Omicron variant of COVID-19 appears to produce less severe disease than the globally dominant Delta strain, but it should not be categorised as "mild", World Health Organization (WHO) officials said on Thursday. read more * Alarmed by the persistence of uncomfortably high inflation, even the most dovish of U.S. central bankers now agree that they will need to tighten policy this year. read more * Traders are currently anticipating a greater than 70% chance for a rate hike of at least 25 basis points at the March Fed meeting, according to the CME FedWatch Tool. * Benchmark U.S. 10-year Treasury yields rose to its strongest level since March 2021, while 10-year TIPS yields hit highest since June 2021. Higher yields raise the opportunity cost of holding gold. * Gold is considered as a hedge against higher inflation, but the metal is highly sensitive to rising U.S. interest rates which increase the opportunity cost of holding non-yielding bullion. * Spot silver was flat at $22.16 an ounce, platinum rose 0.2% to $966.85, and palladium inched up 0.1% to $1,875.78. DATA/EVENTS (GMT) 0700 UK Halifax House Prices MM Dec 0700 Germany Industrial Output MM Nov 0745 France Reserve Assets Total Dec 1000 EU HICP Flash YY Dec 1000 EU HICP-X F&E Flash YY Dec 1000 EU Consumer Confid. Final Dec 1330 US Non-Farm Payrolls Dec 1330 US Unemployment Rate Dec 1330 US Average Earnings YY Dec