NEW YORK/LONDON Gold fell on Monday after strong U.S. economic data boosted investor risk sentiment and a top U.S. Federal Reserve official said an interest rate hike is likely to take place ahead of the market's current expectations due to fading economic concerns.
Spot gold XAU= eased 0.5 percent to $1,216.10 an ounce by 3:01 p.m. EDT (1901 GMT), while U.S. gold for June delivery GCM6 settled down 0.3 percent at $1,219 an ounce.
Spot prices saw their biggest quarterly rise in nearly 30 years in the three months to March, rallying on speculation the Fed was not in a hurry to normalize interest rates, but drifted back towards the key $1,200 level after hawkish comments from several Fed officials.
The U.S. central bank raised rates in December for the first time in nearly a decade.
On Monday, Boston Fed President Eric Rosengren, who is usually cautious, said it was "surprising" that U.S. interest rate futures markets currently imply one or zero rate hikes this year. He said this prediction could prove "too pessimistic."
"That was a bit of a hawkish tilt. I think the market is reading into it that the minutes could be a little more hawkish than we thought," said Bart Melek, head of Commodity Strategy for TD Securities in Toronto, referring to minutes from the Federal Open Market Committee's March meeting that will be released on Wednesday at 2 p.m. EDT (1800 GMT).
"We could see short-term rates move up a little bit more than we were thinking."
The metal is highly exposed to rising interest rates, which lift the opportunity cost of holding non-yielding assets, while boosting the dollar.
"Gold market participants appear to put more weight on the strength of the U.S. economic data and what that will mean for the Fed's rate decisions," Commerzbank analyst Daniel Briesemann said.
Data on Friday showed non-farm payrolls rose by 215,000 last month, higher than expectations of 205,000, underscoring the strength in the U.S. economy.
On Monday, however, data showed that new U.S. factory goods orders fell in February and business spending on capital goods was much weaker than initially thought.
The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares (GLD), last week experienced its first net weekly outflow this year.
As of March 29, hedge funds and money managers boosted their bullish bet to a 2012 high, data showed on Friday.
Silver XAG= fell 0.5 percent to $14.95, platinum XPT= slipped 1.4 percent to $941.10 and palladium XPD= fell 2.3 percent to $551.78.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by Susan Thomas and Chizu Nomiyama)
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