* Gold set to slide 6 pct in May, worst drop since 1982
* Prices fall for 4th straight month for first time since 2000
* Gains in the euro/dollar offer some respite
* Gold/platinum ratio falls to 4-1/2 month low (Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, May 31 (Reuters) - Gold rose back above $1,570 an
ounce on Thursday as expectations of an Irish vote in favour of
Europe's fiscal pact lifted the euro, but this month's sharp
drop in the single currency kept the metal on track for its
worst May performance in 30 years.
Concerns
over Spain's banking system, a surge in Italian borrowing costs and
Greek elections that may determine whether it stays in the euro zone have sent investors fleeing to the safety of the dollar this month.
As well as being caught in the broader market sell-off, gold
is particularly sensitive to gains in the dollar, which can dent
gold's appeal as an alternative asset.
Spot gold was up 0.5 percent at $1,570.20 an ounce at 0945 GMT, while U.S. gold futures for August delivery were up $5.60 an ounce at $1,571.30.
The precious metal is down more than 6 percent so far this
month, its biggest May loss since a near 10 percent fall in
1982. The metal is also set to post a fourth consecutive monthly
loss for the first time since January 2000.
While the possibility of a fresh round of monetary easing in
the United States and demand for alternatives to the beleaguered
euro could lift gold, confidence in the metal remains weak.
"If we had momentum upwards, there are still plenty of
people who are bullish and who would buy into that, but at the
moment, you have pressure from a strong dollar, or perhaps more
accurately a weak euro, and people are just a little bit wary,"
Mitsui Precious Metals analyst David Jollie said.
"If you are looking to make a profit, and you think it will
be $20 lower tomorrow, there's just no reason to buy it today."
"That doesn't alter the fact that there are plenty of bulls
out there. They are waiting for a trigger to send the price
higher, and the question is, what's that trigger?" he added. "It
could be quantitative easing; it could be a short period of euro
stability; it could be the Greek elections."
Expectations Ireland
would vote to support Europe's fiscal pact helped lift the euro from a
near two-year low against the dollar on Thursday, taking some downward
pressure off gold. The single currency remains vulnerable, however.
The euro is set for its biggest monthly fall in at least
eight months, w ith some analysts expecting it to drop towards
$1.20 in coming weeks as the euro zone's debt crisis deepens.
Expectations that Spain may eventually need outside help to
keep its banks afloat kept its government bond yields close to
euro-era highs, while safe-haven German bond prices held near
record highs.
STRATEGIC VIEW
European stocks are also set for their worst monthly loss
since August despite steadying on Thursday, while among other
assets seen as higher risk, oil posted its biggest one-month
fall since 2008 and copper was set for a third monthly decline.
Rather than acting as a safe haven and moving in line with
the dollar and government bonds, as it did for much of 2011,
gold has traded more in line with other commodities of late.
"Investors don't have the same strategic approach to gold as
before," UBS said in a note. "Instead of taking a multi-week or
multi-month view, much of the exposure to gold has been on an
intra-day bias of late. The market is too highly correlated with
risk for many participants' liking."
Gold demand from its traditional leading consumers in India
has been light this year as the weak rupee lifts its cost for
local buyers. However, central banks have been keen to buy gold
in a bid to diversify forex reserves.
Russia,
Mexico and the Philippines have all recently added to their gold
reserves, and the Turkish Central Bank said on Thursday it may gradually
raise the upper limit of lira required reserves that can be held in
gold to 30 percent from 20 percent.
Among other precious metals, silver was up 1 percent
at $28.20 an ounce, spot platinum was up 1 percent at
$1,409.74 an ounce, while spot palladium was up 0.8
percent at $607.25 an ounce.
The gold/platinum ratio, which measures the number of
platinum ounces needed to buy an ounce of gold, rose to a 4-1/2
month high this week at 1.12, as the white metal, which is much
more exposed to the economic cycle than gold, languished.
Platinum slipped below $1,400 an ounce for the first time
since mid January on Wednesday. Support for the metal has eroded
as demand from carmakers, the main consumers of platinum,
declined, particularly in the platinum-heavy European market.
Prices have taken little support from a spate of supply
outages this year. Eastern Platinum said this week it was
suspending the development of its Mareesburg open pit mine and
construction of its Kennedy's Vale concentrator plant.
It will reassess the decision when there was a sustained
recovery in platinum prices and the wider economic environment,
it said.
(Reporting by Jan Harvey; Editing by Mark Potter)
