* SPDR gold holdings drop 20.77 T as prices fall
* Outflow for the year reaches 51.6 T
* Concerns emerge over further selling (Adds detail)
By Jan Harvey
LONDON, Feb 21 The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, said its bullion holdings dropped by 20.77 tonnes on Wednesday, its largest one-day outflow since August 2011.
The fall coincided with the largest one-day sell-off in gold in nearly a year, down 2.6 percent, after minutes from a U.S. Federal Reserve meeting suggested some members were questioning its ultra-loose monetary policy.
Other exchange-traded products backed by bullion, including the COMEX Gold Trust and products operated by ETF Securities in Europe, also reported outflows on Wednesday.
ETFs, which issue securities backed by physical metal, have proved a popular way to invest in gold since the first fund was launched in 2004.
The SPDR fund now holds nearly 1,300 tonnes of gold, larger than the bullion reserves of Switzerland, Russia and Japan. Its holdings peaked at 1,353 tonnes in December 2012 and have fallen 51.6 tonnes so far this year.
Gold prices have dropped 6.3 percent in the same period.
While ETF investors have so far resisted large-scale selling even when prices are falling, such holdings are in theory easy to liquidate if they choose to switch funds to other assets, potentially returning significant amounts of gold to the market.
"What people are concerned about is that the physical ETFs are a major threat in a way, in that if people become convinced that the bull run is unwinding, you may start to see (those inflows) moving in the opposite direction," Standard Chartered analyst Daniel Smith said.
"That can create a vicious circle of selling, and lower prices, and selling. People are watching that very closely."
The Comex Gold Trust operated by iShares in New York reported its largest outflow since July last year, albeit of a much smaller 1.36 tonnes.
ETF Securities, based in London, said holdings of its products declined by just over 25,000 ounces or 0.8 tonnes on the day, still their largest one-day drop in nearly a month. (Reporting by Jan Harvey; Editing by Veronica Brown and Jane Baird)