* 200-day moving average at $1,258 within sight
* Weak physical demand reinforces losses
* Traders await U.S. payrolls data for September
(Recasts, updates prices; adds comment, second byline, NEW YORK
By Marcy Nicholson and Pratima Desai
NEW YORK/LONDON, Oct 5 Gold was little changed
as the dollar pared gains on Wednesday, after bullion inched
down to the lowest in more than three months following the
previous day's sharp sell-off and a technical break well below
the key $1,300-an-ounce level.
Spot silver and platinum prices also extended losses to the
lowest since late June.
Spot gold was down 0.05 percent at $1,267.12 an ounce
by 2:13 p.m. EDT (1813 GMT), after falling to $1,261.59, the
lowest since June 24, when the market reacted to Britain's shock
vote to leave the European Union. This followed Tuesday's 3.3
percent fall, its biggest daily loss in three years.
U.S. gold futures for December delivery settled down
0.1 percent at $1,268.60.
Traders said a break of the 200-day moving average at $1,258
could spark another sell-off, which could drive gold toward
$1,248, a Fibonacci retracement level.
"The stronger dollar, a break of key technical levels,
speculative positioning which was very long, weak physical
Chinese and Indian demand all contributed," said Carsten Menke,
analyst at Julius Baer, referring to recent weakness.
"We could see more speculators head for the exit. You could
see a downward spiral, and the big risk is it spills over into
the physical market."
"Gold prices slumped as strong U.S. data and hawkish U.S.
Fed comments spurred expectations for a December Fed rate hike,"
said UBS Wealth Management Research in a report, adding that it
has lowered its three-month estimate to $1,225 to $1,375 from
$1,275 to $1,425.
"We lower our three-month trading range by $50/oz because a
December hike is still not fully priced, and a solid U.S.
payrolls number on 7 October could prompt further profit-taking
by a similar magnitude."
Traders turned their attention to U.S. payrolls data for
September, due Friday.
Also weighing on gold is weak demand from physically backed
exchange traded funds, at 56.753 million ounces
on Tuesday, not much higher than the 56.266 million ounces
recorded on Sept. 1.
Silver was down 0.01 percent at $17.78 an ounce,
after falling to $17.51, the lowest since June 24.
"We see investors buying gold and, especially silver, on any
pullback in the prices as some silver investors see silver as a
better chance of tripling in price in the future," said Walter
Pehowich, vice president of Investment Services for Dillon Gage
Platinum was down 0.8 percent at $974.15, after
falling to $966.10, the lowest since June 28, while palladium
was down 3 percent at $676.30.
(Additional reporting by Swati Verma and Nallur Sethuraman in
Bengaluru; Editing by David Evans and Lisa Shumaker)