Gold holds near three-week low on firm dollar

Gold was little changed in Europe on Monday, with sentiment softer after the market fell to its lowest in almost three weeks on Friday as upbeat US jobs data fanned the dollar higher.
Dealers said that bullion was likely stay close to current levels just on or above $400 an ounce on Monday in thin trade, with many participants attending an industry conference in China and US markets closed for Labour Day.
Spot gold stood at $401.00/401.75 by 1421 GMT, compared with $400.15/400.90 last quoted in New York on Friday.
The dollar clung to most of the previous session's gains against the euro, with the single European currency last at $1.2073 against the dollar after hitting a low of $1.2045 earlier.
Traders said the market would be capped at $402.00 for the rest of the day.
Bullion dipped below key support at $400 to its lowest since August 16 at $398.75 on Friday, as the buoyant US non-farm payrolls data boosted the dollar on heightened expectations of a US interest rate increase this month.
Gold market participants have been alert to new indications on US monetary policy as higher interest rates would boost demand for the dollar and dent that of gold for non-US investors.
Dealers and analysts said that bullion could be vulnerable to further falls this week after disappointment over a weak close on Friday, which disregarded geo-political tension surrounding last week's siege in Russia and the forthcoming US election.
HSBC metals analyst Alan Williamson said in a daily report that the market's position would become clearer when US markets reopen on Tuesday and also with Wednesday's testimony by US Federal Reserve Chairman Alan Greenspan to the House Budget Panel.
He said that if Greenspan confirmed expectations of a US rate rise in September, the dollar might strengthen towards $1.19 against the euro.
"A move towards $1.1900 would be consistent with a move lower in the gold price to retest support at $394/oz we believe," Williamson said.
Silver backed off further after dropping heavily in line with gold last week, to $6.53/6.56 from $6.66/6.69 last quoted in New York on Friday.
Platinum fell to $846.00/851.00 from $861.00/865.00 previously, while palladium was barely changed at $211.00/216.00 from $210.00/215.00.