Gold steady below $1,300 as Ukraine elections eyed

By A. Ananthalakshmi

SINGAPORE (Reuters) - Gold continued to struggle below $1,300 an ounce on Monday after ending flat for two straight weeks, but the metal could gain from developments in Ukraine where pro-West billionaire Petro Poroshenko notched an emphatic win in the presidential election.

Poroshenko, a billionaire chocolate manufacturer, claimed the Ukrainian presidency on Sunday, taking on a fraught mission to quell pro-Russian rebels and steer his fragile nation closer to the West.

It remains unclear how the tycoon can square the circle of turning firmly westward as long as Russia, Ukraine's major market and vital energy supplier, seems determined to maintain a hold over the second most populous ex-Soviet republic, occupying a vast swathe of the borderlands between East and West.

"The relationship between Russia and the newly elected president in Ukraine will be key for gold prices," said Helen Kau, an analyst at UOB-Kay Hian Securities in Hong Kong.

"Since the new president is not pro-Russia, it could make Ukraine more divided. There is still a lot of uncertainty and political risk there, which could boost gold's safe-haven appeal."

Spot gold was steady at $1,293.01 an ounce at 0354 GMT, after ending flat for a second straight week. The metal has closed between $1,291 and $1,296 in the last seven sessions.

Liquidity was likely to be thin on Monday with U.S. markets closed for Memorial Day and Britain shut for a bank holiday.

The metal has gained 7 percent so far this year on the back of rising tensions between Russia and the West over Ukraine.

But recent outflows from gold funds have indicated that investor sentiment remains fragile. Hedge funds and money managers cut their bullish bets in gold futures and options and switched to a net short position in silver in the week to May 20, according to data from the Commodity Futures Trading Commission on Friday.

Meanwhile, platinum group metals climbed on Monday on supply fears from strikes in major producer South Africa.

Platinum rose 0.7 percent to $1,476.50 an ounce, not too far from an 8-1/2 month high hit last week. Palladium also gained 0.5 percent to $828.00 an ounce, near a 2-1/2 year peak.

A labour strike in South Africa's platinum mines is now in its fifth month - the longest bout of industrial action in the country's history.

Five people were murdered in communities around the platinum mines last week, and the latest round of wage negotiations, mediated by a labour court judge, have made little headway.

(Reporting by A. Ananthalakshmi; Editing by Richard Pullin and Joseph Radford)