(adds closing prices, new quotes)
NEW YORK, Aug 19 (Reuters) - COMEX gold skidded on Monday as the dollar firmed and investors, emboldened by the steadier tone on Wall Street, ditched safe-havens and reallocated into U.S. stocks.
Silver was also overrun by a wave of selling, hitting its cheapest in nearly six months, while a rethink of the bullish sentiment in gold seemed to be unfolding as big speculators toyed with the short side for the first time since the start of gold's 2002 rally.
"Today was a day where the general trend in the stock market was up but gold mining stocks were down. That tended to weigh on prices along with the stronger dollar," said David Rinehimer, head of commodities research at Salomon Smith Barney. "Once we took out the lows of last week we had some technical selling coming in."
December gold skidded $7.70 to settle at $307.70 an ounce. It traded from $315.40 to $306, bringing the Aug. 1 low at $300.30 back within striking distance. Estimated volume was a brisk 41,000 contracts.
Large professional trading firms shoved the contract below last week's low at $312.50 into stop-loss sell orders. The drop accelerated again below $310.
Spot gold closed at $306.30/80, down from $313.75/4.25 late Friday. London bullion dealers fixed the price of gold at $310.10 on Monday afternoon.
The dollar firmed against the euro and yen, making gold less affordable to overseas investors in their own currencies. Money was already rotating back into the stock market, where the Dow Jones industrial average was up 177 points, about 2 percent in afternoon trade as gold closed.
The XAU index of gold and silver mining shares, considered a leading indicator for gold prices because many investors find it easier to play in stocks than in physical bullion, was down 5 percent.
Gold hit 2-1/2 year highs over $330 an ounce in early June, chased higher amid jitters about economic recovery, corporate fraud, U.S. saber rattling against Iraq and the threat of more terror attacks. Low dollar deposit rates increased the cost of carry for producers and speculators to sell gold forward.
The CFTC's Commitments of Traders report released after the close showed noncommercial players had moved to a net short position of 476 contracts as of Tuesday, from a 977-contract long the previous week.
"The party is over," said a bullion dealer.
"The big picture item is the net speculative investment on COMEX, the big speculators, reportable positions are now short, ending a 31-week bull run -- the second longest," he said.
That left the small players carrying the flag. The "nonreportable" positions were still net long 29,908 contracts, little changed from the previous 30,402.
"With no vulnerability (among funds), the market may look to pick on the nonreportable traders, although this only tends to be good for short, sharp swings," wrote IFR/Pegasus analyst Timothy Evans in a commentary late Friday.
September silver tumbled 8.8 cents, closing at $4.405 in busy volume of 25,000 lots. It bottomed at $4.39, its lowest since Feb 25.
"There is some legitimate fund selling in silver," said a bullion dealer.
Spot silver was quoted at $4.41/43, down from $4.49/51 late Friday and Monday's fix at $4.4975.
NYMEX October platinum shed $4.20 to settle at $552.80 an ounce. Spot platinum was at $552.80/560.80.
September palladium rose $2.90 to $322 an ounce. Spot last fetched $318/330.