* Gold trading near one-month lows
* Fears Fed may halt bond-buying scheme dent gold's appeal
* Silver near lowest level since Sept 2010
(Adds quotes, updates prices)
By A. Ananthalakshmi
SINGAPORE, May 21 (Reuters) - Gold fell on Tuesday for the
eighth of nine sessions, hurt by a firm dollar and persistent
outflows from exchange-traded funds, pointing to more downside
pressure on the metal, which has already lost about a fifth of
its value this year.
Gold has been hit by a shift in investments into
higher-yielding equities as fears grew that the U.S. Federal
Reserve could soon end its bullion-friendly bond buying program.
Silver, which had largely held its ground during the
sell-off in precious metals last month, appeared to be the next
target for sellers.
Spot silver fell as much as 2.2 percent on Tuesday to trade
near 2-1/2-year lows reached during the 6-percent slide in the
Gold had fallen 0.3 percent to $1,388.36 an ounce by
0437 GMT. That is within striking distance of the two-year low
of $1,321.35 touched on April 16.
"We can still see some selling pressure this morning. We
don't see too much physical demand from the market," said Peter
Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
Gold gained 2.6 percent on Monday after a seven-session
slide that was its longest losing streak since March 2009.
Expectation that the Fed may soon stop its monthly
$85-billion bond purchases given recent improvements in the U.S.
job market is also limiting gold's draw as an inflation hedge.
"Should Bernanke encourage perceptions that the Fed could
move somewhat earlier than expected, gold could get hurt as a
change in stance may finally usher in higher interest rates,"
said Edward Meir, a metals analyst at futures brokerage INTL
FCStone, referring to Fed Chairman Ben Bernanke.
"Then again, Bernanke may choose to stay on hold and not
deviate from previous positions, in which case we could see an
element of support set in over the precious group as the
'stimulus spigot' would remain open for now."
Bernanke testifies before a congressional committee on
Federal Reserve official Charles Evans said the Fed could
continue its bond buying through the summer, but end it abruptly
in the autumn if the central bank became confident the better
jobs outlook was here to stay.
Spot silver was down 1.4 percent at $22.61 an ounce.
It hit a session low of $22.41, not far off the 2-1/2 year low
of $20.84 on Monday, when it eventually closed 3 percent higher.
U.S. silver futures were little changed at $22.58 an
ounce after sliding by up to 9 percent during the early sell-off
in Asia on Monday.
Holdings of the largest silver ETF, the iShares Silver Trust
, had fallen to their lowest since mid-January. Outflows
also continued in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, with holdings down to 1,031.50
tonnes on Monday, the lowest in more than four years.
U.S. gold futures gained 0.2 percent to $1,386.90.
Physical demand in India, the world's top gold consumer, has
been slowing as its central bank tries to rein in the country's
deficit with steps to cut gold and silver imports, which shot up
138 percent in April.
Precious metals prices 0437 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1388.36 -4.68 -0.34 -17.09
Spot Silver 22.61 -0.31 -1.35 -25.33
Spot Platinum 1474.24 -13.26 -0.89 -3.96
Spot Palladium 743.22 -3.78 -0.51 7.40
COMEX GOLD JUN3 1386.90 2.80 +0.20 -17.24 18558
COMEX SILVER JUL3 22.58 -0.01 -0.03 -25.32 6903
COMEX gold and silver contracts show the most active months
(Editing by Manolo Serapio Jr. and Clarence Fernandez)