* Fed Chair Yellen backs easy monetary policy
* Gold down over 3 percent in March, but up 6.5 pct for Q1
* Analysts see stronger nonfarm payrolls Friday
* Coming up: U.S. auto sales data for March Tuesday
(Adds comment, second byline, dateline, updates market activities) NEW YORK/LONDON, March 31 (Reuters) - Gold fell on Monday, notching its first monthly decline this year as improving prospects for the U.S. economy eroded investment interest and aroused an appetite for riskier assets. Bullion prices have lost around $100 an ounce in the last 10 sessions from a six-month high hit in mid-March, on declining geopolitical tensions, stronger U.S. economic releases and comments by Federal Reserve Chair Janet Yellen earlier this month that interest rates could rise in the first half of 2015. Gold largely ignored Yellen's strong defense of U.S. easy-money policies on Monday, when she said the Fed's "extraordinary" commitment to boosting the economy will be needed for some time to come. For the quarter, however, gold was up about 6.5 percent following a 28-percent fall in 2013, its worst annual performance in more than thirty years. Positive real interest rates around the world and less stimulus from the Fed and other central banks will likely weigh down on gold's appeal as a hedge, analysts said. "I think the stronger U.S. and European economic data and possible improvement in the emerging markets are all headwinds for gold into the next quarter," said Robert Haworth, senior investment strategist at U.S. Bank Wealth Management's Private Client Reserve. Spot gold was down 0.7 percent at $1,283.81 an ounce its lowest level since Feb. 11. It was down more than 3 percent for the month. U.S. COMEX gold futures for June delivery settled down $10.50 at $1,283.80 an ounce, with trading volume about 40 percent below its 30-day average, preliminary Reuters data showed. In her first public speech since becoming Fed chair two months ago, Yellen said there remains "considerable" slack in the economy and job market, a sign that further monetary stimulus can still be effective. Low interest rates, which cut the opportunity cost of holding non-yielding bullion above other assets, had been an important factor driving gold higher in recent years. The pace of business activity in the U.S. Midwest fell more than expected in March to its lowest level since August, resuming its recent trend of slower regional growth, while inflation in the euro zone fell to its lowest since November 2009. The main focus remains the U.S. nonfarm payrolls data on Friday. Analysts widely expect a stronger report on Friday, which will signal that a frigid winter was really the major reason for a string of soft U.S. data seen earlier this year. "We expect a strong non-farm payrolls number on Friday ... the normalisation of the U.S. economy was always going to be a bear factor for gold, it has not happened in January and February because of the cold weather," Societe Generale analyst Robin Bhar said. Among other precious metals, platinum rose 0.6 percent to $1,411.55 an ounce and palladium gained 0.4 percent to $772.57 an ounce, as labour strikes continued in top producer South Africa. Silver was unchanged from Friday's close at $19.77 an ounce.
2:39 PM EST LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold JUN 1283.80 -10.50 -0.8 1282.70 1299.30 121,534 US Silver MAY 19.752 -0.038 -0.2 19.725 20.010 30,204 US Plat JUL 1420.80 13.60 1.0 1410.00 1426.50 11,703 US Pall JUN 777.10 3.40 0.4 771.30 780.50 3,153 Gold 1283.81 -9.69 -0.7 1283.03 1298.20 Silver 19.770 0.000 0.0 19.740 19.990 Platinum 1411.55 8.05 0.6 1411.75 1423.00 Palladium 772.57 3.07 0.4 772.50 778.50 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 130,238 196,679 182,829 17.44 0.06 US Silver 32,021 48,024 58,338 24.94 -0.86 US Platinum 12,301 17,961 12,577 17.99 0.66 US Palladium 3,170 6,653 5,795 28.17 0.38
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Jason Neely, Anthony Barker and Marguerita Choy)