PRECIOUS-Gold has biggest 1-day drop since July on eco fears

* Gold finds support after briefly falls below key 50 DMA
* Sharp decline in U.S. equities, slowdown worries weigh
* Gold drops about 2 pct for week, second weekly fall
* Coming up: U.S. CFTC Commitment of Traders report due 3:30
p.m.

(Adds market details, updates prices)
By Frank Tang
NEW YORK, Oct 19 (Reuters) - Gold fell over 1 percent to a
one-month low on Friday, its biggest daily drop in more than
three months, hit by technical selling and tumbling U.S.
equities on economic uncertainty around the world.
Silver and platinum group metals also slid broadly after
several U.S. multinational manufacturers led by General Electric
CO. gave earnings forecasts that disappointed investors,
citing weaker demand in Western Europe.
Bullion appeared to find support at its 50-day moving
average after it briefly broke below that key technical support.
It has now erased all of its gains posted after the Federal
Reserve in early September launched a third round of bond-buying
known as quantitative easing to stimulate economic growth.
"People who rushed in for QE expecting to get a significant
lift are getting out of the market," said Frank McGhee, head
precious metals trader of Integrated Brokerage Services LLC.
"The longer we don't make a new high, the more people start
getting nervous about where gold is trading," McGhee said.
Gold also notched a near two-percent decline this week, its
biggest weekly drop in about 4 months. The metal has so far
failed to trade above $1,800 an ounce this year.
Some traders said profit-taking could further pressure gold
prices, after hedge funds and money managers raised their gold
futures positions to their most bullish in nearly 14 months last
week, the U.S. Commodity Futures Trading Commission (CFTC)
Commitment of Traders report showed.
Spot gold was down 1.2 percent at $1,720.90 an ounce
by 2:38 PM EDT (1838 GMT), after hitting a low of $1,715.79,
which marked the cheapest price since Sept. 7.
U.S. COMEX gold futures for December delivery settled
down $20.70 an ounce at $1,724, with trading volume about 10
percent below its 30-day average, preliminary Reuters data
showed.
Bullion weakened as German Chancellor Angela Merkel raised
new hurdles to using the euro zone's rescue fund to battle the
region's debt crisis. Gold was already under pressure from
disappointing economic data this week including U.S. home resale
and a jump in jobless claims, and signs China's economy has
slowed.

BULL MARKET IN QUESTION
Gold's trading well below its record high during European
debt worries suggests the metal could see further weakness,
veteran trader Dennis Gartman told clients in a note.
"Something's amiss in the gold market and its health is
growing more and more suspect," Gartman said.
Gold hit an all-time high of $1,920.30 set in September last
year.
Spot gold's relative strength index (RSI) fell to below 40
on Friday, down sharply from an overbought level of over 80 in
September, indicating some investors might start to look for
bargains.
Among other precious metals, silver dropped 2.2
percent to $32.06 an ounce, down over 4 percent for the week for
its largest weekly decline in almost four months.
Platinum was down 1.7 percent at $1,611.70 an ounce,
while palladium slid 2.7 percent to $621.70 an ounce.
2:38 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1724.00 -20.70 -1.2 1716.00 1744.70 138,569
US Silver DEC 32.097 -0.771 -2.3 31.945 32.915 41,844
US Plat JAN 1615.50 -28.20 -1.7 1612.60 1652.10 8,914
US Pall DEC 623.00 -24.20 -3.7 620.50 646.25 3,594

Gold 1720.90 -20.19 -1.2 1717.01 1743.08
Silver 32.060 -0.710 -2.2 31.940 33.030
Platinum 1611.70 -27.30 -1.7 1613.75 1644.49
Palladium 621.70 -17.30 -2.7 624.00 644.00

TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 152,409 167,242 173,852 15.47 0.21
US Silver 44,177 49,638 56,458 35 7.00
US Platinum 8,985 15,069 9,761 22.32 0.18
US Palladium 3,630 4,074 4,792

(Additional reporting by Clare Hutchison and Jan Harvey in
London, editing by Anthony Barker, Jason Neely and Andrew Hay)