Gold hits four months low

LONDON, June 2 (Reuters): Gold fell for a fifth session on Monday, its longest losing streak in seven months, as rallying stock markets diverted interest from bullion, and ahead of the latest European Central Bank policy meeting and key U.S. data this week.

Prices have fallen sharply after breaking through $1,285 an ounce on Tuesday, the lower limit of a range they had kept to for much of the previous month. They hit a low of $1,240.69 an ounce earlier on Monday, their weakest since late January.

Spot gold was down 0.5 per cent at $1,244.20 an ounce at 0939 GMT, while U.S. gold futures for August delivery were down $1.30 an ounce at $1,244.70.

The ECB is tipped to announce a package of policy options after its meeting on Thursday, following heavy hints that monetary policy will be loosened in a variety of ways to support growth.

The following day sees the release of monthly U.S. non-farm payrolls data, a leading barometer of the health of the world's largest economy. Both events will be closely watched by gold traders for their impact on currencies and U.S. monetary policy.

"There are two forces in control - fast money pulling prices lower, and the market looking to price in a more dovish ECB and a strong non-farm payrolls number," Societe Generale analyst Robin Bhar said.