PRECIOUS-Gold struggles after 2 pct loss as buyers cash in gains
* Gold slides as support near $1,320/oz gives way
* Data eyed for clues on U.S. policy ahead of Fed meeting
* South African platinum fund reports fresh inflows
LONDON, July 25 (Reuters) - Gold prices arrested earlier losses on Thursday but the market was still in negative territory after the previous session's 2 percent sell-off, as a break of key chart support near $1,320 an ounce prompted more buyers to cash in gains.
The precious metal rallied for four straight sessions to Tuesday, hitting its highest in a month, after assurances from the Federal Reserve that any changes to its gold-friendly quantitative easing policy would be data-dependent.
Well-received U.S. housing data released on Wednesday helped knock prices sharply lower, however. A failure to hold onto gains spooked investors, prompting further liquidation, especially with physical demand muted at higher prices.
Spot gold eased to $1,318.64 an ounce at 1215 GMT, while U.S. gold futures for August delivery were steady at $1,320 an ounce.
"The selling gained speed after support at $1,321 broke once again," Heraeus trader Alexander Zumpfe said. "It failed to deliver sufficient support already yesterday evening, but finally the metal managed to close above it. Today the break through that level looks a bit stronger."
On the wider markets, the dollar was little changed, giving scant direction to gold, but a retreat in other commodities weighed.
The markets are awaiting fresh clues from the Fed on the outlook for its QE programme, which helped fuel a rally in gold prices to record highs in recent years by keeping up pressure on long-term interest rates and fuelling fears over inflation.
The U.S. central bank meets next Tuesday and Wednesday, with a statement on policy due at the end of the session. Ahead of that data including today's weekly jobless claims numbers at 1230 GMT will be closely watched.
"Yesterday's good U.S. housing data certainly took the edge off gold," Standard Bank analyst Walter de Wet said. "Demand out of China is still strong, but with gold at $1,340, it is not as strong as it was below $1,300, so we don't have that strong support."
"We're likely to find support around $1,300, but gold is going to struggle to maintain prices above $1,330, at least ahead of next week's Fed meeting," he added. "Our position is that the Fed will continue to taper QE, and market consensus believes it will probably happen in September."
Comex August gold options are due to expire later in the day. Open interest in U.S. Comex gold options rose to a record high of more than 1.8 million contracts earlier this week, according to COMEX owner CME Group.
"There is a big open interest around $1,300 and $1,310 which might stall the sell-off," said a Hong Kong-based trader.
Silver was down 0.6 percent at $20.02 an ounce, while spot platinum was down 0.8 percent at $1,430.24 an ounce and spot palladium was down 0.9 percent at $737.22 an ounce.
Catalyst maker Johnson Matthey's profits rose 8 percent in the first quarter of its financial year, boosted by stronger sales of catalysts for trucks in Europe. JM is one of the world's biggest refiners of platinum group metals.
In South Africa, Absa Capital reported a 3,990-ounce increase in holdings of its New Gold Platinum fund on Wednesday, bringing its total weekly inflow to 15,969 ounces, already double last week's total.
It now holds 543,463 ounces of platinum, and is the second largest platinum ETF in the world.
(Additional reporting by A. Ananthalakshmi and Veronica Brown; editing by William Hardy)