* Euro drops to 15-month low vs dollar
* Gold demand seen supported ahead of Lunar New Year
* Coming up: US ADP employment data for Dec at 1315 GMT
By Harpreet Bhal
LONDON, Jan 5 (Reuters) - Gold slipped on Thursday,
hit by a weak euro on escalating concerns about the euro zone
debt crisis, although losses were limited as rising tensions
between Iran and western countries helped fuel some safe-haven
buying.
Spot gold slipped 0.1 percent to $1,608.80 an ounce
by 1144 GMT from $1,610.60 late in New York on Wednesday, giving
up gains from earlier in the session when the precious metal hit
a two-week intraday high.
U.S. gold slipped 0.2 percent to $1,609.40 an ounce.
"Gold is not able to go much higher because the dollar is
up, but at the same time we have the uncertainties from the oil
market ... which should be lending a hand," Saxo Bank senior
manager Ole Hansen said.
"We may need to see a bit more stabilisation in prices
before the market starts to look towards more gains."
The euro dropped to a 15-month low against the dollar as
signs of weakness in euro zone banks highlighted the extent to
which they are suffering from the deepening debt crisis.
A strong dollar makes dollar-priced commodities more
expensive for holders of other currencies.
French borrowing costs rose slightly when the euro zone's
second-largest economy sold debt for the first time this year on
Thursday, but demand was solid despite concerns the country
could lose its AAA credit rating.
The market is now set to focus on debt sales from Spain and
Italy next week to gauge the appetite for peripheral euro zone
debt in the wake of the region's growing crisis.
Meanwhile, growing tension between Iran and Washington and
its allies over Iran's nuclear programme have heightened
political uncertainty in the region, helping fuel the appetite
for gold as a safe haven and lending support to crude prices.
LUNAR NEW YEAR
Gold demand usually picks up ahead of the Lunar New Year,
which falls on Jan. 23 this year, in China and elsewhere in
Asia, traders said.
"We are seeing Chinese banks on the bid ahead of the Chinese
New Year," a Singapore-based trader said.
Physical dealers in Hong Kong reported purchases from funds,
albeit in small volumes, and supply is likely to improve next
week as refineries resume operations after the New Year break.
Exchange-traded funds, however, have yet to see a pick-up in
investment interest. Holdings of SPDR Gold Trust GLD, the
world's largest gold-backed exchange-traded fund, remained
unchanged at 1,254.57 tonnes for the seventh session. GOL/ETF
Investors are also likely to watch for further evidence of
the pace of economic recovery in the United States, with the ADP
national employment report due later on Thursday ahead of the
key non-farm payrolls report on Friday.
Silver fell by 0.6 percent to $28.93 an ounce, while
platinum slipped 0.4 percent to $1,409.24 an ounce.
Palladium eased 1.4 percent to $637.05 an ounce.
"As gold becomes more expensive, the much-regarded
gold/silver ratio has risen to 55. Although silver has gained
considerable ground in recent days in gold's slipstream, there
has been a clear upwards trend in the gold/silver ratio for some
months now," Commerzbank analysts said in a note.
(Additional reporting by Rujun Shen in Singapore; editing by
Jane Baird)
