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Early COMEX gold drops to 6-wk low after holiday

NEW YORK, Feb 18 (Reuters) - COMEX gold fell to a six-week low early on Tuesday on reopening from a long weekend, playing catch-up with overseas losses on Monday as investors bet that prospects of an imminent war in Iraq were receding.

Floor trade was very thin as traders got their bearings after the Presidents Day holiday on Monday, with many arrivals delayed as the region dug out from a blizzard that dropped up to two feet of snow on parts of the New York area.

At 0940 EST (1346 GMT), COMEX April gold was down $5.90 from Friday's close, trading at $346.30 an ounce in a range of $349-$346.00, the lowest since Jan. 8.

Spot gold was at $345.55/6.55, down from $350.50/1.50 at Friday's New York close. London bullion dealers fixed Tuesday morning's spot reference price at $347.00.

At an emergency summit of European Union diplomats in Brussels on Monday, a relatively positive assessment of Iraqi cooperation by U.N. weapons inspectors last week and support for France, which wants more time for inspections, blunted a U.S.-British drive for an early U.N. resolution authorizing war.

But the EU's 15 leaders agreed to a tougher than expected statement that war could be used as a last resort, warning Iraq that U.N. arms inspections could not go on indefinitely.

"We came off yesterday before the Europeans spoke. We were off $8, then we rebounded after the Europeans spoke," said a floor broker. "There really isn't much happening. A lot of traders aren't even in to work yet."

Gold futures reached at 6-1/2 year high this month at $390.80 as geopolitical jitters, a weak dollar and spiking oil prices kept investors and speculators interested in the precious metal as a safe-haven.

But the shake out over the last two weeks has been surprisingly brutal, even though many believed a correction was needed because the market was so overbought.

"Just the hint of a possible delay of a war with Iraq was enough to turn investor psychology negative and to create an absolute avalanche of selling pressure," wrote Leonard Kaplan, president of Prospector Asset Management, in his daily commentary on Tuesday.

In other precious metals, March silver was off 2.0 cent at $4.515, trading $4.54 to $4.50. Spot silver was quoted at $4.52/54, unchanged from Friday's close. It fixed at $4.51 an ounce.

NYMEX April platinum was off $21.80 at $653.20 an ounce. Spot was last priced at $669.00/674.00. Dealers attributed the slide to profit taking on platinum's recent advance to 23-year highs, exacerbated by thin markets.

March palladium was off $1 at $253.00 an ounce while spot palladium last fetched $249.00/257.00.