LONDON/NEW YORK (Reuters) - Gold remained under pressure trading below a near-term technical support level on Tuesday due to a weaker euro, with investors betting against a meeting of European leaders this week doing much to tackle the region’s debt crisis.
Platinum tracked gold lower, shrugging off news of a fresh production outage in South Africa.
The euro remained clear of last week’s four-month lows but was stuck in negative territory against the dollar as worries about Greek politics and Spanish banking problems kept the currency under pressure. <FRX/>
Spot gold was down 0.63 percent at $1,576.21 an ounce at 13:45 p.m. (1745 GMT).
U.S. gold futures for June delivery were down $6.1 or 0.38 percent at $1,582.6 but off an intraday low of $1,572 hit earlier.
While prices are up from the December lows revisited last week, bullion was still 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 an informal 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.
France’s new president, Francois Hollande, said he wanted all options on the table to stimulate growth in Europe when the EU leaders meet and ”won’t speak about euro bonds as I don’t want to upset anybody.
Gold tends to trade together with the euro, so any weakness in the single European currency can lead to investors to cash in their bullion positions to realize a higher profit in their local currency.
“Attention is being focused upon the EU summit meeting this week at which Greece shall be the main... and perhaps the sole... talking point,” said analyst Dennis Gartman in his daily note, The Gartman letter.
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 the gold prices this week, options on June COMEX futures that expire on Thursday show investors are divided on the 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 (IMPJ.J), 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 (NUM) and the Association of Mineworkers and Construction Union (AMCU).
The platinum price, which rose by as much as 24 percent on the year because of the strike that spanned February and March, traded down 0.34 percent on the day at $1,456.24 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 0.3 percent on the day at $609.25 an ounce, and silver down 0.7 percent at $28.22 an ounce.
Editing by Alison Birrane and Leslie Gevirtz