Gold edged up on Monday, but remained near a three-month low as the dollar hit an 11-year high after a strong US jobs report boosted expectations the Federal Reserve would soon hike interest rates. Spot gold rose to $1,172.41 an ounce by 0733 GMT, retaining most Friday's near 3 percent drop. It reached its weakest since December 1 of $1,163.45 in the previous session, when data showed US jobless rate fell to the lowest since May 2008.
US nonfarm payrolls increased 295,000 last month after rising 239,000 in January. "The number fuelled expectations that the Fed will now raise rates sooner rather than later, with the consensus now back to a June increase as opposed to September," said INTL FCStone analyst Edward Meir. "We likely will see continued dollar strengthening and more commodity weakness," said Meir, adding that gold prices could drop to $1,141.
The dollar drifted to its highest in more than 11 years against a basket of major currencies early on Monday. Higher interest rates could dent demand for non-interest-bearing assets such as gold, while a stronger dollar would also hurt bullion's appeal as a safe-haven asset. Gold is likely to trade lower due to a stronger dollar and weaker euro, said ANZ analyst Victor Thianpiriya, who expects the metal to trade at $1,100 over the next three months.
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