(Recasts, adds U.S. trading session, NEW YORK to dateline, byline)
By Barani Krishnan and Clara Denina
NEW YORK/LONDON, July 7 (Reuters) - Gold fell on Monday after stronger-than-expected monthly U.S. jobs data boosted talk of an early interest rate hike, even as traders looked for other factors to help direction.
The dollar index neared a two-week high against a basket of currencies after a government report last Thursday showed the U.S. jobless rate was closing in on a 6-year low, suggesting brisk economic growth. U.S. markets were closed on Friday for the Fourth of July holiday.
Speculation has been rife that a U.S. Federal Reserve rate hike may come earlier - perhaps in the third quarter of 2015 rather than the first quarter of 2016 - if the economy keeps improving. A hike would encourage investors to withdraw money from noninterest-bearing assets such as gold.
The Fed has said it needs more evidence of growth before it considers higher rates.
"The gold market needs continual stimulus to keep it moving and we've nothing particularly new today, so the focus is again on the better U.S. jobs numbers and speculation that rates may move up faster because of that," said Adrian Day, principal at Adrian Day Asset Management in Annapolis, Maryland.
The spot price of gold was down 0.2 percent to $1,317.11 an ounce by 2:30 p.m. EDT (1830 GMT).
The most active U.S. gold futures contract, for delivery in August, settled down 0.3 percent at $1,317.
The dollar index was up for a fifth straight day, gaining support from a steady climb in U.S. bond yields since the U.S. jobs report.
Returns from U.S. bonds are closely watched by gold traders as these are viewed as a key market indicator of Fed action in the coming months.
Speculators raised their net long position in U.S. gold futures by 22,573 contracts to 136,929 in the week to July 1, according to data from the Commodity Futures Trading Commission.
Among other precious metals, silver was down nearly 1 percent at $20.92 an ounce, while platinum was up 0.1 percent to $1,489.50 an ounce.
Palladium rose 0.7 percent to $865.22 an ounce after reaching a 13-year high of $867 on strong demand from the auto industry, which uses the metal in catalytic converters.
Palladium was boosted by data last week showing U.S. auto sales at an eight-year high in June. Worries about the supply of platinum group metals from major producer South Africa has also aided the market.
About 2,000 workers at Impala Platinum's Marula mine in South Africa have been on strike since Friday, demanding higher wages. (Additional reporting by Jan Harvey in London and A. Ananthalakshmi in Singapore; Editing by Jane Baird, David Evans and Jeffrey Benkoe)