* Investors brace for Wednesday's EU summit
* Selling accelerates as euro weakens
* Platinum prices fall even after strike news
By Josephine Mason
NEW YORK, May 22 Gold traded near intraday lows
o n T uesday afternoon with selling accelerating on low volumes as
the euro lost further ground ahead of a much-anticipated
The pressure started on Monday after bullion failed to break
through key resistance at $1,600 per ounce, sending prices below
near-term technical support levels.
That selling snowballed on Tuesday afternoon in New York,
sending prices below $1,570 an ounce as the euro weakened with
investors betting Wednesday's meeting of European leaders would
do little to tackle the region's debt crisis.
"The euro continued to sag. It's not going to make a
decisive move until the EU summit," said James Steel, chief
commodity analyst at HSBC.
Weaker oil prices on news of a potential deal between Iran
and the U.N. nuclear watchdog also weighed on the market, still
reeling from last week's sell-off to December lows.
Spot gold was down 1.44 percent at $1,569.26 an ounce
at 3:30 p.m. EDT (1930 GMT). U.S. gold futures for June
delivery settled 0.76 percent lower at $1,576.6, off an intraday
low of $1,568 per oz.
While prices are up from the December lows revisited last
week, bullion remained on a weak technical footing, trading
below its 14-day moving average.
Some U.S. investors were already focusing on the long
Memorial Day holiday weekend, but most were bracing for a
possible recovery in the euro if the European summit in Brussels
on Wednesday agrees on a pan-European bond issue aimed at
raising much-needed cash to bolster Greece's banking system.
"If it (any agreement from the summit) is seen as a solution
and strengthens the euro, it will be positive for gold," Steel
France's new president, Francois Hollande, said he wanted
all options on the table to stimulate growth in Europe when the
EU leaders meet.
Gold tends to trade together with the euro, so any weakness
in the single currency can lead investors to cash in their
bullion positions to realize a higher profit in their local
The weakness in the single currency resulting from the euro
zone debt crisis is for now outweighing any positive safe-haven
Looking at the likely course of gold prices this week,
options on June COMEX futures that expire on Thursday show
investors are divided on gold's chances of breaking and staying
above $1,600 an ounce.
Most near-the-money open interest, positions in options
contracts with strike prices close to the current futures price,
is split almost evenly between calls and puts. A call
contract gives the owner the right, but not the obligation, to
buy the underlying commodity at a pre-determined price by a set
date, and a put confers the right without obligation to sell.
Platinum was in the red even after news of further
industrial action at Impala Platinum, the world's
second-largest platinum producer, which is losing 3,000 ounces
of output a day as most workers are not reporting for duty at
its Rustenburg mine.
The mine, shut for six weeks earlier this year because of a
power struggle between unions, has been hit by fresh clashes
between the dominant National Union of Mineworkers and the
Association of Mineworkers and Construction Union.
The platinum price, which rose as much as 24 percent on the
year because of the strike that spanned February and March,
traded down 1.40 percent on the day at $1,440.75 an ounce.
"The lack of an immediate price reaction suggests no one is
that keen on taking a large long position regardless of supply
risks while demand concerns from Greece etc are still ongoing,"
Mitsubishi analyst Matthew Turner said.
The impact of the euro zone debt crisis on the European car
market, where platinum is used extensively in catalytic
converters for diesel vehicles, has prompted speculators in U.S.
platinum futures to cut their holdings to their lowest level in
2-1/2 years in the last three months.
Holdings of platinum in exchange-traded products are also
down since hitting a record 1.398 million ounces in March, to a
near four-month low at 1.322 million ounces.
Yet platinum remains the best-performing precious metal of
2012, with a gain of 4.5 percent, compared with a rise of 1.1
percent in gold and a loss of 6.3 percent in palladium.
Palladium was down 0.57 percent on the day at $605.72 an
ounce, and silver down 1.19 percent at $28.12 an ounce.