* Gold sinks 4 percent below $820 on heavy liquidation
* Soaring dollar, crude weakness trigger sell-stops
(Recasts, updates throughout, changes dateline to NEW YORK,
pvs LONDON, changes byline)
By Frank Tang
NEW YORK, Aug 11 (Reuters) - Gold tanked 4 percent to end
below $820 an ounce on Monday, dropping to its cheapest level
this year as a soaring dollar against the euro and chart-based
sell-stops triggered a bout of long liquidation.
Bullion could still fall further in the near term during
the less liquid summer sessions as prices dropped below major
support levels and as the dollar continued to strengthen,
dealers said.
"It's clearly a technical break. It's clearly the oil and
the dollar/euro. You could see some panic here in the gold
market now," said Bruce Dunn, vice president of trading at
Auramet Trading in New Jersey.
Gold <XAU=> ended at $819.25/820.85 by New York's last
quote at 2:15 a.m. EDT (1815 GMT), which marked the cheapest
price since Dec. 27, 2007. It was down sharply from its
previous close of $855.40/857.00 late in the U.S. market on
Friday.
Jonathan Jossen, a COMEX floor trader in New York, said
that some hedge funds and gold investors were reallocating
their portfolios to the equity market after a good recent rally
in stocks.
"Everybody's trying to get out the doors," Jossen said. He
said gold could test the $780 an ounce level in the near term.
U.S. gold futures for December delivery <GCZ8> settled down
$36.50, or 4.2 percent, at $828.30 an ounce on the COMEX
division of New York Mercantile Exchange.
Monday's losses were the biggest one-day percentage loss
since March 19, when gold futures had plummeted 5.8 percent.
Gold failed to hold at a recent high of $850 an ounce, and
sell-stops triggered at lower prices accelerated losses.
A sudden resurgence of the dollar against the euro and a
lower finish of crude oil triggered the heavy sell-off in gold,
with the metal giving up all of its gains it posted earlier in
the session.
U.S. crude futures fell $2 on concerns after a drop in
crude imports by China.
Gold typically moves in the opposite direction to the
dollar, as it is bought as an alternative investment to the
U.S. currency.
The U.S. dollar extended gains versus the euro on Monday,
breaking the 1.49 level as crude oil prices declined further,
boosting U.S. stocks.
Investor interest in gold has been muted by recent price
falls. According to data released by the Commodity Futures
Exchange Commission, liquidation of commitments to buy led to a
drop in net long positions in Comex gold and silver last week.
[]
"Following a third straight week of price declines,
noncommercial traders trimmed their net long positions in gold
and silver by 10.2 percent and 6.6 percent respectively," said
Deutsche Bank in a note.
The volume of gold held by exchange-traded funds also
dipped a touch last week. The world's largest gold-backed ETF,
SPDR Gold Trust <GLD.P>, said its gold holdings dropped 9,000
ounces on Friday.
London-based ETF Securities said holdings of its Physical
Gold exchange traded commodity <PHAU.L> fell 1 percent last
week to 1.728 million ounces. Holdings of its Physical Platinum
ETC <PHPT.L> fell 11.5 percent in the same period, it added.
Meanwhile bullion holdings of the world's largest
silver-backed ETF, the iShares Silver Trust <SLV.A>, dipped 1
percent on Thursday to 6.197.33 tonnes.
Spot silver <XAG=> ended at $14.62/14.68 an ounce, the
weakest level this year, down from $15.23/15.31 late in New
York. The metal tumbled to a seven-month low of $14.52 an ounce
in early sessions.
Among other precious metals, spot platinum <XPT=> closed
lower at $1,517.00/1,537.00 an ounce from $1,543.00/1,563.00
late in New York on Friday.
Spot palladium <XPD=> dropped to $319.00/327.00 an ounce
from $332.00/340.00 an ounce, having fallen to its lowest level
in nearly a year to $324 on Friday.
Both metals are consolidating after posting losses last
week, with platinum down nearly $100 an ounce on Friday from
the end of the previous week, and palladium off 10 percent.
(Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy)
