* U.S. jobs growth slows sharply in April
* Dollar hovers close to over 2-month low
* SPDR Gold Trust holdings up 0.6% on Friday
* Spot gold may test resistance at $1,847/oz - technicals (Updates prices)
By Shreyansi Singh
May 10 (Reuters) - Gold prices inched higher on Monday to trade near a three-month peak hit last week after weaker-than-expected U.S. jobs data supported hopes that interest rates will remain low for some time, bolstering the metal's appeal.
Spot gold XAU= was up 0.2% at $1,834.30 per ounce by 0726 GMT, after hitting its highest since Feb. 11 at $1,842.91 in the previous session.
U.S. gold futures GCv1 were up 0.2% at $1,834.30 per ounce.
"The U.S. jobs report is pretty much the start and finish of the story for gold at the moment. It has really tightened expectations out of the market, at least at the margins of Federal Reserve rate hikes," IG Market analyst Kyle Rodda said.
With the momentum to the upside, $1,850 will be the next key level to watch for gold, he added.
Data released on Friday showed U.S. job growth unexpectedly slowed in April, as businesses scrambled for workers and raw materials amid rapidly improving public health and massive government aid. 266,000 jobs that U.S. firms added last month were "nowhere near" expectations, a Federal Reserve official said. U.S. central bank has pledged to keep interest rates low until inflation and employment pick up.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar.
The dollar index .DXY languished near a more than two-month low. USD/
Spot gold may test a resistance at $1,847 per ounce, a break above which could lead to a gain to $1,876, according to Reuters technical analyst Wang Tao. TECH/C
Indicative of sentiment, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD , rose 0.6% on Friday. GOL/ETF
Speculators raised bullish bets in COMEX gold and silver contracts in the week to May 4. CFTC/
Palladium XPD= rose 0.5% to $2,941.92. Silver XAG= gained 0.7% to $27.63, while platinum XPT= was up 0.7% at $1,258.16.
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