PRECIOUS-Gold prices fall as investor confidence wanes

* Gold surrenders early gains to turn lower

* Move above $1,300/oz 'driven by speculation'

* Platinum strikes grind on in South Africa

(Updates prices, adds comment)

LONDON, May 6 (Reuters) - Gold prices fell on Tuesday, surrendering early gains as weak physical demand made investors wary about the outlook, though tensions in Ukraine and a slide in the dollar index to 6-1/2 month lows lent some support.

Spot gold was down 0.2 percent at $1,306.30 an ounce at 1421 GMT, having earlier risen as high as $1,314.10. U.S. gold futures for June delivery were down $3.30 an ounce at $1,306.00.

The metal bounced back above the key chart level of $1,300 an ounce late last week as escalating tensions in Ukraine outweighed the impact of strong U.S. jobs data.

It has struggling to maintain those gains, however.

"We think the move above $1,300 is not sustainable, because it seems to be predominantly driven by speculation," Commerzbank analyst Daniel Briesemann said. "Physical demand seems to be somewhat muted. We've seen significant ETF outflows in the last couple of weeks and muted coin sales in the United States."

He added, "We're seeing some more shaky hands in the market, and once they decide to take profits or that it's time to get out, prices will probably come under pressure."

Outflows from the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, totalled nearly 10 tonnes last week.

Prices got some support from the drop in the dollar index.

A lack of conviction that the U.S. Federal Reserve will follow a reduction this year of its emergency money-printing with an actual rise in interest rates is at the heart of the dollar's weakness, analysts said. That also bodes well for gold, which benefits from a low interest rate environment.


Demand in Asia was soft overnight, precious metals house MKS said in a note, with Japan, Hong Kong and South Korea all absent for public holidays.

"Very light two-way flows were traded above $1,310 early in the session, with some more buying coming in the lead-up to the Chinese open," it said.

"It felt like traders were expecting the same reception from the Chinese as yesterday - with the general public in covering shorts - but this never (happened) and the market quickly reversed below $1,310."

Among other precious metals, silver rose for a third session after hitting its lowest since early January last week at $18.82 an ounce. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, has retreated to 66.8 from last week's 3-1/2 year high of 67.6.

Spot silver was up 0.4 percent at $19.60 an ounce.

Platinum group metals outperformed on supply worries, with spot platinum up 0.5 at $1,451.75 an ounce and spot palladium up 0.1 percent at $814 an ounce.

World number two platinum producer Impala Platinum said on Tuesday that if a 15-week strike continued at its South African operations, it would have to cut supply to clients to 40 percent of demand over the next three to four months.

South Africa's Association of Mineworkers and Construction Union on Monday rejected the latest wage offer by the world's three biggest platinum mining companies, who said the workers were afraid to accept the companies' latest wage offer because of "threats to their personal safety".

(Reporting by Jan Harvey; editing by Susan Thomas and Jane Baird)