* Break below 200-day moving average triggers selling
* Heavy overnight trading sets bearish tone for day
* Encouraging U.S. jobless claims, housing data weigh
* U.S. July new home sales Monday
By Frank Tang and Clara Denina
NEW YORK/LONDON, Aug 21 Gold slid 1.3 percent to
its lowest in two months on Thursday, extending losses to a
fifth consecutive session, as fears about an early interest rate
hike by the U.S. Federal Reserve sparked a technical selloff
after prices broke below a key support level.
Bullion was hit hard by follow-through selling after minutes
from the Fed's July meeting on Wednesday showed policymakers
debated whether interest rates should be raised earlier given a
surprisingly strong job market recovery, traders said.
Thursday's encouraging U.S. housing and jobs data also
stirred economic optimism, pressuring gold. Bullion
underperformed the precious metals complex and equities, with
the S&P 500 index up 0.4 percent to a record.
In overnight trading between 2:00 a.m. and 2:05 a.m. EDT
(0600-0605 GMT), more than 8,000 lots changed hands for the
December contract, or about one-third of the volume at the time,
when prices broke below $1,287 an ounce, the 200-day moving
average where traders placed stop-loss orders, traders said.
"Now that we have crossed below the 200-day moving average,
an important threshold watched by many, a lot of trend-following
traders are likely to establish short positions in gold," said
Phillip Streible, senior commodities broker at Chicago-based RJO
Spot gold was down 1.3 percent at $1,275.46 by 2:41
p.m., its biggest one-day loss in more than a month. Earlier,
bullion traded as low $1,273.06 an ounce, its weakest since June
U.S. COMEX gold futures settled down $19.80 at
Investors largely ignored data showing holdings in the SPDR
Gold Trust, the world's largest gold-backed
exchange-traded fund, rose 0.9 tonne to 800.09 tonnes on
Wednesday, the third straight daily increase.
Analysts said the next focus for the market will be Fed
Chair Janet Yellen's comments at the Jackson Hole central
bankers' gathering on Friday.
Among other precious metals, silver was unchanged
from Wednesday's close at $19.45 an ounce, having earlier
touched a two-month low of $19.25.
Spot platinum fell to its lowest level in more than
three months at $1,407.30. It was down 0.5 percent at $1,414.75,
down for the ninth consecutive session in the longest losing
streak since July 2008.
Spot palladium, which hit a 13-1/2 year high of $900
earlier this week before falling back, was up 1.4 percent at
$874.90 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore and
Susan Thomas in London; Editing by Michael Urquhart, Jane Baird,
Marguerita Choy and Nick Zieminski)