PRECIOUS-Gold hovers near $1,560/oz; Greece woes feed caution

* Light physical selling seen as prices rebound
* Technical signals for spot gold mixed
* Coming Up: Euro zone Markit Manufacturing Flash PMI; 0758
GMT

(Updates prices)
By Rujun Shen
SINGAPORE, May 24 (Reuters) - Gold hovered near $1,560 an
ounce on Thursday, remaining on shaky ground as worries about
Greece and the euro zone continued to dominate market sentiment
after a European Union summit yielded few practical steps to
manage the debt crisis.
Gold, typically a safe-haven option, has been moving in
tandem with riskier assets as the euro zone debt problem grinds
on. Senior officials have advised European leaders to prepare
contingency plans in case Greece quits the single currency,
although the EU urged Athens to stay the course on austerity.

Light buying in the physical market emerged when prices fell
towards a key support level near $1,530 in the previous session,
but selling trickled in as prices rebounded.
"Clients are not too interested in entering the market right
now," said a Singapore-based dealer. "They are worried that if
Greece eventually pulls out of the euro zone, the euro will fall
and drag gold down with it."
Spot gold was nearly flat at $1,560.50 an ounce by
0700 GMT, after dropping to $1,533.41 in the previous session.
U.S. gold gained 0.8 percent to $1,560.70.

Gold's room on the downside might be limited, as investors
with faith in bullion for the longer term will likely return if
prices weaken, some analysts argued.
"We'll see buy-on-dip type of purchases from investors and
even central bank buying if prices fall below $1,530 an ounce,"
said Li Ning, an analyst at Shanghai CIFCO Futures.
"But on the upside gold is still facing a lot of pressure
from a stronger dollar."
The dollar index stayed near its highest level since
September 2010, as the euro wallowed near a two-year low against
the greenback.
China's factories took a hit in May as export orders fell
sharply, according to the HSBC Flash Purchasing Managers Index,
adding to concerns about global growth, which is already under
threat from the deepening euro zone crisis.
Worries about Greece outweighed concerns about a potential
supply shortage in platinum caused by a shutdown of the world's
biggest platinum mine Rustenburg. Spot platinum traded
flat at $1,418.70, up from a four-month low of $1,400.9 hit on
Wednesday.
Spot palladium fell to $583.18 in the previous
session, its lowest in nearly six months, before recovering some
lost ground to $592.95 on Thursday.

Precious metals prices 0700 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1560.50 -0.58 -0.04 -0.21
Spot Silver 27.92 0.13 +0.47 0.83
Spot Platinum 1418.70 0.45 +0.03 1.84
Spot Palladium 592.95 4.17 +0.71 -9.13
COMEX GOLD JUN2 1560.70 12.30 +0.79 -0.39 19706
COMEX SILVER JUL2 27.89 0.37 +1.33 -0.11 4586
Euro/Dollar 1.2583
Dollar/Yen 79.45
COMEX gold and silver contracts show the most active months

(Editing by Richard Pullin)