PRECIOUS-Technical selling sends gold down 2 pct below $1,600/oz
* Gold falls below $1,600/oz, first time since August
* Gold heads for biggest weekly drop since June
* G20 meeting in focus, markets await currency news
(Updates price break) LONDON, Feb 15 (Reuters) - Gold prices extended losses on Friday to more than two percent when it broke below a key chart support level at $1,600 an ounce to its lowest level since August, after earlier declines triggered technically-driven selling. Softer appetite for the precious metal from investors and a dearth of physical demand from China during the Lunar New Year holiday put the metal on track to slip 3 percent this week, its biggest weekly drop since June. Spot gold hit a low of $1,598.04 an ounce, its weakest since Aug. 16, and was at $1,603.70 by 1555 GMT, down 1.83 percent. U.S. gold futures for April delivery were off $31.7 an ounce at $1,603.80, a 1.93 percent drop. "The 1,625 level was a big support and once that was broken, stop-selling orders kicked off and now we are in a new range of $1,550 to $1,625," said Adrien Biondi, head of precious metals trading at Commerzbank. Sell stops are automatic technical selling signals that start after prices break through key support levels, which allow traders to limit losses in a falling market. Losses in the euro also pressured the metal. The single currency remained in negative territory against the dollar after data showing manufacturing in New York state expanded in February for the first time in seven months. Gold investment has softened this year on signs that economies such as the United States and China are picking up, while continued problems of sovereign debt and economic weakness in Europe seem to be priced in by the market. "The market now seems to be getting used to the more positive frame of mind of a recovering U.S. (economy) - which entails lower probability of continued QE and in turn a lower gold price," MKS Capital said in a note. The next focus for the market remains a G20 meeting and ensuing statement, which could affect broader markets by giving more clues on currencies. "(The Group of 20) will try to put the 'currency wars' discussion to rest," MKS added. "Given the uncertainty around the meeting's results, (there could be) volatility... next Monday." The physical market was again subdued in Asia. Chinese players, however, were expected to take advantage of the lower prices to replenish stocks when they return from their week-long public holiday for the Lunar New Year celebrations. "With prices coming lower, all the physical buyers will start covering some of the shorts and maybe some investors will come around as well," Commerzbank's Biondi said.
SOROS CUTS STAKE IN SPDR, PAULSON HOLDS Investment interest in gold has suffered in recent months after the latest monetary easing measures from the Federal Reserve failed to push prices above $1,800 an ounce, and as U.S. economic data took on a firmer tone. Data released on Thursday showed billionaire investor George Soros had cut his holdings in the SPDR Gold Trust, the world's largest gold exchange-traded fund, by more than half in the fourth quarter, while GLD's biggest shareholder John Paulson left his holdings unchanged. A few others also cut exposure to gold, including investment fund PIMCO and Tiger Management's Julian Robertson, who dissolved his entire stake in Market Vectors Gold Miners ETF. The SPDR's holdings fell 0.23 percent on Thursday from Wednesday, while those of the largest silver-backed ETF, New York's iShares Silver Trust, rose 0.26 percent during the same period. In other precious metals, platinum and palladium gave up gains made at the start of the week and followed the rest of the complex lower. Spot platinum declined to a two-week low of $1,668 an ounce and was later seen at $1,672.99 an ounce, down 2 percent. Palladium was down 1.6 percent to $750.97, retreating from a new best since September 2011 at $775 hit on Wednesday. Spot silver fell to a five-week low of $29.87 an ounce, before settling at $30, still down 1.3 percent.
(Additional reporting by Jan Harvey and Carole Vaporean; Editing by Mark Heinrich and Andrew Hay)