* Dollar languishes close to over 2-month low
* UBS raises palladium price forecasts (Updates prices)
By Eileen Soreng
May 10 (Reuters) - Gold held firm near a three-month high on Monday after last week's miss on the U.S. jobs growth numbers weighed on the dollar and bolstered expectations that interest rates will remain low.
Spot gold XAU= rose 0.4% to $1,836.89 per ounce by 1:44 p.m. EDT (1744 GMT), after touching its highest since Feb. 11 at $1,845.06. U.S. gold futures GCv1 settled 0.3% higher at $1,837.60.
"The disappointing U.S. job number ultimately catalyzed a round of algorithmic short-covering," said TD Securities commodity strategist Daniel Ghali.
Also supporting the precious metal was the return of discretionary capital flowing into gold alongside strong physical demand from China and India last month prior to Indian lockdowns, Ghali added. GOL/AS
U.S. nonfarm payrolls data on Friday showed jobs growth unexpectedly slowed in April, pushing the dollar to an over two-month trough, making gold less expensive for holders of other currencies. USD/ lower-than-expected job numbers upset investors' hopes of a roaring recovery in the world's largest economy and that the U.S. Federal Reserve might tighten policy earlier than expected.
The U.S. central bank has pledged to keep interest rates low until inflation and employment pick up. Lower interest rates reduce the opportunity cost of holding non-yielding bullion. is missing from the recent rise in prices and would be required to revive the rally is the participation of safe-haven seekers," Julius Baer analyst Carsten Menke said in a note.
Elsewhere, palladium XPD= rose 1.5% to $2,971.39 per ounce after hitting an all-time high last week on supply shortfall worries.
UBS raised its end-June and end-September price forecasts for the metal, used mainly in emission-reducing auto catalysts for vehicles, to $3,100 per ounce. bank expects the palladium market to be under-supplied by about 1 million ounces this year.
Silver XAG= eased 0.2% to $27.39 per ounce, while platinum XPT= climbed 0.8% to $1,258.87 per ounce. Both metals earlier reached a more than two-month peak.