NEW YORK, June 24 (Reuters) - COMEX gold fell to a 6-1/2 week low early Tuesday as speculators bailed out of long positions before the Federal Reserve sits down for a 2-day meeting on interest rates later in the day.
August gold at 0955 EDT was down $5.00 at $348.40 an ounce. From an early high of $355.40, it fell to $347.00, its lowest since May 8.
Stop-loss sell orders were triggered around $352 and again on the break below $350, which accelerated the move. Chart watchers said the drop appears to have snapped the uptrend in place since gold bottomed at $320.50 on April 7.
"It broke through the 100-day moving average on August, so it's just technical selling," said a trader, adding, "It broke through a pretty big trend line that started at the beginning of April."
Spot gold was trading at $347.85/8.45, down from $352.80/3.30 at Monday's close and London's early fix at $354.35.
Gold strayed from its usual tight link with the euro, which was little changed before Fed policy makers meet to discuss interest rates.
The market considers a reduction in the 1.25 percent federal funds target rate a near certainty, amid worries about deflation and slow growth. But it is unsure whether the Fed will cut an aggressive 50 basis points or just a quarter percentage point.
But the Dow Jones industrial average moved up 43 points by mid-morning on an upbeat consumer sentiment report for June, which sapped some interest from the safe-haven metal.
The Conference Board's consumer confidence index came in at 83.5 which was little changed from May's 83.6 but above the anticipated 82.4. Better-than-expected data since last week have many in the market now leaning toward a smaller cut from the Fed, which would be less bullish for gold.
The Fed has eased 12 times since early 2001, bringing the fed funds rate to its lowest in 42 years. Low dollar deposit yields drove investors into the euro and currency alternatives like gold.
Gold hit 6-1/2 year highs in February near $390 an ounce partly due to the weak dollar, before long liquidation drove prices down to the April lows. In late May it rallied back to its highest since February creating an extremely overbought situation on the COMEX.
July silver was off 5.3 cents at $4.505 an ounce, trading $4.565-$4.49. Spot silver was indicated at $4.51/53, down from $4.55/57 late Monday. The fix was at $4.54.
NYMEX July platinum was 90 cents easier at $668.00 an ounce. Spot platinum was at $665.00/670.00.
September palladium was down $1.05 at $179.00 an ounce. Spot palladium was last quoted at $175.00/180.00.