* 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 (Reuters) - 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 European summit.
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 said.
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 currency.
The weakness in the single currency resulting from the euro zone debt crisis is for now outweighing any positive safe-haven demand.
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.