* Gold prices return most of Friday’s near 2-pct gain
* Spot silver reverses gains, breaks support at $16/oz
* Stocks fall as Greek lawmakers fail to elect president (New throughout with market comment, updated prices; adds byline, NEW YORK dateline)
By Chris Prentice and Jan Harvey
NEW YORK/LONDON, Dec 29 (Reuters) - Gold fell on Monday, giving back most of the previous session’s sharp short-covering gains, and silver fell also, as a strong U.S. dollar and bearish chart signals offset uncertainty over the prospect of fresh elections in Greece.
Spot gold was down 1.1 percent at $1,181.16 an ounce by 2:09 p.m. EST (1909 GMT), following a 1.8-percent gain on Friday.
The greenback recovered earlier losses, with the dollar index higher against a basket of major currencies.
Silver was down 1.7 percent at $15.74 an ounce, reversing earlier gains and extending losses after breaking through support at $16.
Trading volumes were thin due to the Christmas and year-end holidays. Floor trading for CME Group’s precious and base metals futures and options products will be closed on Jan. 1.
“As we traded into the U.S. session, there was more focus on thin trading conditions and a breach of key technical areas” for gold and silver, said David Meger, director of metals trading for Vision Financial Markets in Chicago.
European shares and periphery euro zone bonds earlier tumbled on news that the Greek parliament rejected the government’s presidential candidate, setting the stage for an election that the anti bailout Syriza party could win.
The news from Athens “raises the risk of Grexit (Greek euro exit) once again - not the best climate for Europe to begin the new year,” Saxo Bank’s head of commodity research Ole Hansen said, noting the support underlying the market in early trade.
Spot gold was on track for a 2 percent loss in 2014, and spot silver was poised for a 19 percent annual decline.
U.S. gold futures for December delivery fell $13.40 to settle at $1,181.90 an ounce.
Bearish sentiment in the bullion market was evident in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund. The fund’s holdings fell 0.08 percent to 712.30 tonnes on Friday, a six-year low.
Demand for the metal was soft overnight in Asia, the primary market for physical gold dealing.
However, China’s gold imports from Hong Kong in November rose to their highest level since February, indicating strong demand in the world’s top bullion consumer ahead of the Lunar New Year.
Spot platinum was down 1.2 percent at $1,196.75 an ounce and palladium was 0.9 percent lower, at $807.00 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Michael Urquhart and Gunna Dickson)