Oil dropped to a seven-week low as an employment report raised concern that U.S. fuel demand will slow and Iran agreed to resume talks on its nuclear program.

Futures fell as much as 2.4 percent after the government reported on April 6 that the U.S. created 120,000 jobs in March, below the median forecast of 205,000. Negotiations between Iran and the United Nations Security Council members plus Germany are scheduled to start April 14, easing concern that supplies will be disrupted.

The U.S. employment increase was the smallest in five months. The data also showed the unemployment rate fell to 8.2 percent as people left the labor force, while workers put in fewer hours.

Iran and the representatives of the six nations will meet for nuclear talks starting April 14 in Istanbul, Michael Mann, a European Union spokesman, said yesterday. Their last meeting was in January 2011. The government in Tehran is under increasing economic pressure from trade, financial and energy sanctions, including U.S. penalties on banks that process payments for Iranian crude.

Consumer prices in China rose 3.6 percent from a year earlier after gaining 3.2 percent in February, the National Bureau of Statistics said on its website today. That was more than the median 3.4 percent estimate. Faster inflation may limit the government’s options to stimulate growth in the second-largest oil-consuming country.

Crude for May delivery fell to $100.81, the lowest level since Feb. 16, on the New York Mercantile Exchange. Prices have climbed 2.1 percent this year.

Brent oil for May settlement dropped $2.33, or 1.9 percent, to $121.10 a barrel on the London-based ICE Futures Europe exchange.

Gold is going up after the disappointing data on U.S. employment and reports of unexpectedly high inflation in China.

On Friday it was announced that the U.S. unemployment rate unexpectedly fell in March to 8.2% from 8.3% in February, but the number of jobs in non-farm sectors of the economy grew by only 120,000. The data were taken with a negative market, despite the decline in unemployment - expected to increase in the number of jobs will be 205,000. At the same time the February figure was revised upward to 240,000 from 227,000.

Inflation in China reached 3.6% in March year on year, while economists had forecast consumer prices by 3.3%. This fact has also increased investor interest in gold as a reliable asset, since, according to many analysts, the data on the growth of consumer prices in China are proof that the government will continue to stimulate economic growth in China.

Demand for gold from investors in China has grown dramatically in the past year because of high inflation: according to World Gold Council, the physical demand increased by 20 percent compared with 7 percent growth in the global market as a whole.

Analysts suggest that, despite the weak data on employment, on the whole state of the U.S. economy is improving due to the ongoing crisis in the eurozone, which will soon lead to the strengthening of the dollar and thus reduce the price of gold. Last week the dollar to a basket of currencies increased by 1.3 percent.

Jewellers in India - the world's largest gold market - on Saturday completed a three-week strike, as the finance minister promised that the government has to rethink the introduction of the excise tax on non-brands jewelry. Demand for the physical market in China has risen in the last week due to lower world prices.

May futures on the COMEX for gold today rose to $ 1648.6 an ounce.