PRECIOUS-Gold at 4-month low as U.S. jobs rise makes rate hike likely

* Gold touches weakest level since March 15

* Silver hits 15-month low, palladium weakest since June 2

* U.S. non-farm payrolls jump by 222,000 jobs

(Updates prices, milestone; adds comment, byline, NEW YORK dateline) NEW YORK/LONDON, July 7 (Reuters) - Gold fell to the lowest in nearly four months on Friday after stronger than expected United States jobs data increased the likelihood of another U.S. interest rate increase and the dollar rose. U.S. non farm payrolls jumped by 222,000 jobs last month, the Labor Department said, beating expectations of a 179,000 gain. "We have a stellar U.S. jobs number," said Naeem Aslam, chief market analyst at Think Markets. "The data has brought negative news for gold traders as there isn't really anything in this number which is going to put the brakes on an interest rate hike."

Spot gold was down 1.2 percent at $1,209.90 an ounce

weakest since March 15. It has dropped about 2.5 percent this week and is set for its biggest weekly fall since the week of May 5.

U.S. gold futures for August delivery settled down

1.1 percent at $1,209.70. Gold has shed about 6 percent since touching a seven-month peak of $1,295.97 on June 6.

The dollar index was firmer, making gold more

expensive for buyers outside the United States. Dollar-denominated bullion typically loses value when the greenback and interest rates rise as it does not pay interest. "Gold crumpled past May lows, unable to survive a dual assault from a strong payrolls headline and silver plunging through 2016 lows," said Tai Wong, director of base and precious metals trading for BMO Capital Markets. "Recent hawkish central bank rhetoric led by a likely rate hike from the Bank of Canada next week has offset mild inflation data and geopolitical concern, may see gold test $1,200 short term."

Silver fell 3.2 percent to $15.49 per ounce, after

falling 7 percent within one minute of trade to $14.86 an ounce, its lowest in 15 months. Traders said the move appeared to have been driven by an accidental order. The metal was on track to close the week down more than 6 percent.

Palladium fell 0.4 percent to $837.75 per ounce after

hitting its lowest since June 2 earlier in the session. Analyst Carsten Menke at Julius Baer in Zurich said palladium is likely to be pressured due to struggling car sales in the United States and China, the world's two biggest markets. "We see palladium prices trading above fundamentally justified levels," he said in a note.

Platinum dropped 1.2 percent to $899. It is down

about 2 percent so far this week.

(Additional reporting by Nithin Prasad and Vijaykumar Vedala in Bengaluru; editing by Alexander Smith and Marguerita Choy)