* Investors, physical buyers lose interest after rally
* European shares hit 5-year highs, dollar languishes
* Platinum group metals still tipped to outperform
(Updates throughout, changes dateline from SINGAPORE)
LONDON, Oct 21 (Reuters) - Gold steadied on Monday, struggling to build on its biggest weekly rise in two months, as a rally sparked by expectations that the Federal Reserve will postpone tapering its monetary stimulus programme ran out of steam.
Gold climbed nearly 4 percent last week on expectations the Fed would have to maintain stimulus measures after a two-week government shutdown hurt growth expectations. But strong gains in other assets have dampened gold's appeal to investors, while physical demand remains lacklustre.
Spot gold was flat at $1,315.30 an ounce at 1015 GMT, while U.S. gold futures for December delivery were up 20 cents an ounce at $1,314.80.
Spot prices hit their highest in 1-1/2 weeks on Friday after rebounding from a three-month low at $1,251.66.
"The move last week was largely driven by short covering and renewed dollar weakness," VTB Capital analyst Andrey Kryuchenkov said, adding "Buying had already dried up with little follow-through investment."
"There's no significant physical demand; investors have lost interest; the underlying macro tidings are not as bad as at the start of the year; and safe-haven or inflation hedging is irrelevant at this point."
European shares hit five-year highs on Monday and the dollar held near an eight-month low on growing expectations the Fed will have to delay scaling back stimulus after a 16-day government shutdown.
Gold had fallen by more than a fifth this year on expectations the Fed's $85 billion monthly bond-buying scheme, which has driven gold higher by pressuring long-term interest rates and fuelling fears over inflation, is coming to an end.
GOLD IMPORTERS STRUGGLE IN INDIA
Gold importers in India, the world's biggest buyer of the metal, struggled to get supplies on Monday, paying record premiums just ahead of the peak festival season next month. Demand tends to peak around the five-day Diwali festival of lights, which this year falls in the first week of November.
Indian sellers have struggled to source supplies for domestic use for almost three months, since the central bank introduced a rule that required 20 percent of all imports be re-exported.
Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, held near 4-1/2 year lows on Monday, having posted a seventh consecutive weekly outflow last week.
Among other precious metals, silver underperformed, falling 0.8 percent to $22.06 an ounce. Spot platinum was up 0.2 percent at $1,433.99 an ounce, while spot palladium was up 0.4 percent at $741.50 an ounce.
The platinum group metals have taken support this year from threats to supply in major producer South Africa, and tentative signs of a demand recovery.
"Gold has been unable to benefit from a weakening U.S. dollar or expectations that QE tapering will be postponed into next year," Deutsche Bank said in a note. "We still view PGMs as the outperformer within the sector."
(Editing by James Jukwey)