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PRECIOUS-Gold slides to 2018 low as dollar strengthens

* U.S. 10-year Treasury yield touches seven-year high

* Platinum slips to lowest since mid December

* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl

(Update prices, adds comment) LONDON, May 17 (Reuters) - Gold slid to a fresh low for the year on Thursday as another rise in U.S. bond yields and concerns over political risk in Italy held the dollar index near its 2018 peak. The precious metal has fallen more than 2 percent this week on gains in the U.S. currency and a rise in U.S. 10-year Treasury yields to seven-year highs. Higher yields increase the opportunity cost of holding non-yielding assets such as bullion.

Spot gold was down 0.1 percent at $1,289.34 an ounce gold futures for June delivery were down $2.80 at

$1,288.70. The dollar has climbed nearly 4 percent this quarter on expectations that the Federal Reserve will lift U.S. interest rates further this year to curb inflation, at a time when other central banks are still keeping monetary policy loose. "I expect further weakness in gold prices because I think the dollar can rise a bit further," ABN Amro analyst Georgette Boele said. "Gold prices are mainly driven by the U.S. dollar and then U.S. yields ... our year-end 10-year U.S. Treasury forecast stands at 3.2 percent, with three more Fed rate hikes." The euro remains under pressure, hovering near a five-month low on concerns that political developments in Italy could cause wider disruption in the common currency bloc. Political uncertainty arising out of North Korea after Pyongyang threatened to pull out of a meeting with the United States was likely to limit downside for gold, analysts said. But that was not enough to offset other factors. "The precious metal still remains vulnerable to the prevailing dollar and rate headwinds," INTL FCStone said in a note. From a technical perspective, gold prices were looking vulnerable to further losses after breaking below key chart levels this week, according to analysts who study past price moves to determine the future direction of trade. "Gold has eroded key support, namely the 200-day moving average, the $1,302.74 March low and the 50 percent retracement (of the December-to-January rally)," Commerzbank said in a note on technicals. "We have been forced to neutralise our outlook as the market is now on the defensive."

Among other precious metals, silver was up 0.6

percent at $16.45 an ounce, having touched its lowest in two weeks at $16.17 in the previous session.

Platinum was flat at $887.30, off an earlier five-month low of $879, while palladium rose by 0.5

percent to $985.20.

(Additional reporting by Apeksha Nair in Bengaluru Editing by David Goodman and Edmund Blair)