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[SINGAPORE] 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 US$1,172.41 an ounce by 0733 GMT, retaining most Friday's near 3 percent drop. It reached its weakest since Dec 1 of US$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 US$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 US$1,100 over the next three months.
In a sign of waning investor interest, holdings in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell to the lowest in over a month on Friday, while speculators cut net long positions in COMEX gold futures and options for a fifth straight week.
Demand for physical bullion due to the price dip could provide some support to prices.
Premiums in the second biggest gold consumer China largely traded between US$5 and $6 on Monday, up from US$4-$5 in the previous session, in a sign of increased demand.
Traders were also focussing on the outcome of a Monday meeting of euro zone finance ministers, who are due to discuss a recent letter of pledged reforms sent by Greece.
Athens and its euro zone partners struck a deal last month to extend its bailout programme by four months, but the cash-strapped country has until April to successfully conclude a bailout review before it receives any further aid.
Persistent uncertainty over the debt crisis, which could see Greece exit the eurozone, could boost bullion.