* Gold drops for second straight session
* SPDR fund sees biggest inflow since 2011
(Adds details on fund flows, updates prices)
By A. Ananthalakshmi
SINGAPORE, Feb 22 Gold extended losses below its
highest level in a year on Monday as the dollar and equities
strengthened, but the metal remained underpinned above $1,200 an
ounce as caution in financial markets prompted investors to
channel money into bullion funds.
The metal jumped to a one-year high earlier this month on
turmoil in the stock markets and concerns over the global
economy, but posted small losses last week on profit-taking and
as equities consolidated. Bullion remains one of the best
performing assets of the year with a 15 percent gain.
Investor optimism was evident in fund flows: assets in SPDR
Gold Trust, the world's top gold exchange-traded fund, saw
the biggest single-day inflow since August 2011 on Friday.
Spot gold slumped over 1 percent to a session low of
$1,211.30 an ounce, before paring some losses to trade at
$1,213.80 by 0739 GMT. It declined 0.3 percent on Friday.
"Increases in ETF (exchange-traded fund) holdings continue
to support gold higher, while we have seen some of this buying
momentum offset by reductions in TOCOM positioning and recent
selling in China," said MKS Group trader Sam Laughlin, referring
to the Tokyo Commodity Exchange.
Top consumer China has been on the offer since its return
from a week-long holiday last Monday, a sign they do not expect
prices to go much higher and cannot be counted on to support the
market with post-Lunar New Year demand set to falter.
Bullion was also hurt by a higher dollar, which was
supported by Friday data that showed underlying U.S. consumer
price inflation accelerated in January by the most in nearly
4-1/2 years. Asian share markets edged cautiously higher.
But investor sentiment in gold remained largely bullish.
The SPDR ETF saw an inflow of 19.33 tonnes on Friday alone,
bringing total assets to 732.96 tonnes, its
highest since May 2015.
Inflows into the fund since the beginning of the year have
already surpassed the quantity of outflows seen in all of 2015.
Holdings of the top eight gold ETFs have
also shown a similar trend.
Other data showed speculators hiked their bullish bet in
COMEX gold futures and options to a near four-month high in the
week to Feb. 16.
Bank of America Merrill Lynch said on Friday that equity
funds posted their longest run of outflows since 2008 in the
last week, while investors shovelled $3.2 billion into gold, the
biggest two-week gold inflow since May 2010.
PRICES AT 0739 GMT
Metal Last Change Pct chg
Spot gold 1213.8 -14.01 -1.14
Spot silver 15.196 -0.134 -0.87
Spot platinum 926.6 -12.1 -1.29
Spot palladium 497.25 -1.75 -0.35
Comex gold 1214.2 -16.6 -1.35
Comex silver 15.21 -0.163 -1.06
COMEX gold and silver contracts show the
most active months
(Reporting by A. Ananthalakshmi; Editing by Joseph Radford and