(Updates prices, adds comment)
* Gold lifts from lows as euro edges back into the black
* Prices still under pressure as Greek woes hurt risk appetite
* Silver set for longest string of declines since 2008
By Amanda Cooper
LONDON, May 16 (Reuters) - Gold recovered from its lowest since late December on Wednesday, edging back into positive territory as U.S. stocks opened higher and after speculation Germany and France will act to keep Greece in the euro zone lifted the euro into the black.
Spot gold was up 0.3 percent at $1,549.04 an ounce at 1403 GMT, off a low of $1,527.00. The metal was earlier sucked into a broad-based financial market sell-off on the back of alarm over political turmoil in Greece.
Despite its recovery, it remains vulnerable to a further drop after its longest stretch of losses in nearly five months.
Gold fell along with other more industrial commodities such as copper and crude oil, under pressure from an early rise of the dollar, which put silver on track for its longest stretch of consecutive daily losses in nearly four years.
Fears a Greek exit from the euro zone would worsen the European debt crisis gripped European markets on Wednesday, sending shares and other riskier assets lower as investors shifted funds into safe havens like the U.S. dollar.
“Negative market sentiment seems well entrenched and we may see further downside in the price,” BNP Paribas analyst Anne-Laure Tremblay said. “In particular, we could see further cross-asset liquidation if the probability of a Greek default increases in the next weeks.”
Gold tends to trade inversely to the dollar, so that strength in the U.S. unit encourages non-U.S. investors to sell gold in exchange for greater profits in their own currencies.
The euro recovered after touching four-month lows versus the dollar, while European equities struggled off their lowest level for the year. Gains were muted, however.
“It’s difficult to see a turnaround just yet. There will be one, but I don’t think this is the time, just when we are in the eye of the storm,” Societe Generale analyst Robin Bhar said.
“Clearly, with people staring into the abyss, it could (fall) $50 or even $100 lower as it washes out. That is the unpredictability of it all and as equities fall, as the Greeks take money out of the banks and the banking sector collapses, I suppose you’d have to be wary of further price falls just to cover for losses in other markets,” he said.
U.S. gold futures for June delivery were down $8.40 an ounce at $1,548.70.
In a small positive for gold, billionaire fund manager John Paulson held on to his stake in the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, in the first quarter of 2012, a regulatory filing showed on Tuesday.
The prospect of improvement in physical demand for gold from the Indian jewellery sector took a knock on Wednesday with the drop in the rupee to a record low against the dollar, driven by the widespread risk aversion.
Buying in India, the world’s largest bullion consumer, has emerged with the decline in the dollar-denominated gold price to 4-1/2 month lows this week, but local dealers have said the weakness in the rupee could curb this.
“Definitely physical buying has gone up, although demand is not overwhelming,” said a dealer in Singapore.
“India did buy gold last night. They are not really in the market yet today, but I am sure they will be buying.”
The wedding season is underway in India and will taper off by the end of the month. Gold jewellery is an essential part of the dowry Indian parents give to their daughters at weddings.
Silver was up 0.4 percent on the day at $27.79 an ounce, having fallen for eight days in a row, its longest losing streak since a 10-day decline that began in late August 2008, just before the global financial crisis claimed some of Wall Street’s biggest banks.
Silver lost nearly 11.5 percent in this time, compared with a 6 percent decline in the gold price over the same period.
This has left the gold/silver ratio - the number of ounces of silver needed to buy one ounce of gold - at 56.07, its highest since the start of the year. The higher the ratio, the greater the outperformance of gold relative to silver.
Platinum was up 0.7 percent at $1,436.49 an ounce, but remains on the verge of wiping out all of its gains for the year to date. So far in 2012, platinum is showing a 3.1 percent gain, having retreated from a year-to-date gain of 27 percent in late February.
Palladium was up 0.1 percent on the day at $595.97, having fallen to its lowest since late November. (Additional reporting by Jan Harvey; editing by William Hardy)