PRECIOUS-Gold slides to 2-week low on dollar strength

                                
 * Strong dollar hits gold market sentiment
                                
 * Weak physical jewellery demand weighs on gold
                                
 
                                
 (Updates prices, adds comment, changes byline)
                                
 By Jan Harvey and Kylie MacLellan
                                
 LONDON, June 8 (Reuters) - Gold tumbled to two-week lows on
Monday as weak physical demand reinforced a sell-off triggered
by the stronger dollar against the euro.
                                
 Spot gold <XAU=> was bid at $944.85 an ounce at 1425 GMT,
against $955.30 an ounce late in New York on Friday. Earlier it
touched $943.30, the lowest since May 27.
                                
 The dollar jumped against the euro, extending the sharp
gains it posted late last week, as the single currency was
dragged lower by another sovereign downgrade for Ireland. [USD/]
                                
 "There is not much physical demand from jewellers," said
Matthew Turner, analyst at VM Group. "So with a stronger dollar
and a related desire by investors to take the profits they can,
there is not much to keep (gold) up."
                                
 Analysts say current prices are high for consumers in major
jewellery markets such as India, but that buying could resurface
if prices fall to $900 an ounce or lower.
                                
 U.S. gold futures for June delivery <GCM9> on the COMEX
division of the New York Mercantile Exchange fell $16.3 to
$945.40 an ounce.
                                
 Softer crude prices also dented interest in gold as a hedge
against oil-led inflation. [O/R]
                                
 "Gold prices are likely to be largely determined by the
interplay between inflation expectations ... and dollar
direction," HSBC said in a note.
                                
 "If the (U.S. Federal Reserve) is seen as likely to maintain
a high level of vigilance regarding inflation, we believe gold
prices are likely to come under pressure."
                                
 
                                
 SIZEABLE FALL-OFF
                                
 Investors' appetite for gold also appeared to be waning,
with the bullion holdings of the largest gold Exchange Traded
Fund, New York's SPDR Gold Trust <GLD>, declining on Friday.
[GOL/SPDR]
                                
 Turkey, one of the world's leading gold consumers, said its
imports of the metal fell back to zero in May from 26 kg the
previous month. Abu Dhabi gold sales remained flat, an industry
group said. [ID:nL8708730] [ID:nL8582329]
                                
 Silver <XAG=> was at $14.82 an ounce against $15.23,
tracking moves in gold. Platinum <XPT=> was bid at $1,227 an
ounce against $1,262 late in New York on Friday, while palladium
<XPD=> was at $245 against $253. 
                                
 The metals, primarily used in autocatalysts, followed gold's
lead. Platinum and palladium are also under pressure from the
carnage in car manufacturing sector. [ID:nN02511678]
                                
 "We've seen a bit of a strengthening in the dollar and some
of the consumption side numbers from the auto industry haven't
been that positive," said Societe Generale analyst David Wilson.
                                
 "We saw a pick-up in German car sales in May, but there was
also quite a sizeable continued fall-off in U.S. auto sales."
                                
 ETF Securities' platinum and palladium backed ETCs both grew
last week, while Zurich Cantonal Bank's Platinum ETF <ZPLA.S>
added 6,359 ounces or 3.7 percent to its holdings.
 (Editing by Anthony Barker)