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PRECIOUS-Huge sell order pushes gold to six-week low

* Spot gold hits lowest since May 17

* Hedge funds cut long position in COMEX gold for second week

* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl

(Updates throughout, changes dateline from BENGALURU) LONDON, June 26 (Reuters) - Gold tumbled to its lowest price in nearly six weeks as a large sell order and a stronger dollar hit sentiment on Monday, though losses were limited by political uncertainty around the world.

Spot gold was down 1.2 percent at $1,241.28 an ounce

at 1135 GMT, having dropped as far as $1,238.76, its lowest

since May 17. U.S. gold futures slid by 1.1 percent to

$1,242.10. The sale of 18,500 lots of gold, totalling 1.85 million ounces, and 5,000 ounces of silver in 5,500 lots on Comex in a short space of time was behind falling prices, said Afshin Nabavi, head of trading at MKS in Switzerland. "Clearly somebody sold it by mistake and bought it back quickly, triggering stops below $1,250," said MKS trader Bernard Sin. "Fundamentally, there is still a lot of uncertainty in the world, with Italian bank bailouts, Trump's policies and Brexit. The world is in geopolitical chaos and gold is still good insurance." Allegations of ties to Russia have cast a shadow over U.S. President Donald Trump's first five months in office while looming Brexit negotiations are also fueling concern about global stability. In Italy, meanwhile, the state has come to the rescue of

Monte dei Paschi di Siena and rival regional lenders

Popolare di Vicenza and Veneto Banca, but the Italian banking industry remains saddled with 300 billion euros ($335 billion) of soured debts. The stronger U.S. currency was also a negative for gold, manking the dollar-denominated metal more expensive for holders of other currencies, potentially subduing demand. On the technical front, Sucden Financial's Kash Kamal said that gold's failure to hold above the 50-day moving average, around $1,258, was one reason behind the sell-off. "Combination of sub-$1,250 prices and support at the 200-day moving average (near $1,235) could see prices consolidate around here for the rest of the day." Investors' lack of interest in gold can be seen at SPDR Gold

Trust , the world's largest gold-backed exchange-traded

fund, where holdings dipped by 0.35 percent to 851.02 tonnes on Friday.

Elsewhere, silver fell 1 percent to $16.41 an ounce and platinum slipped 0.9 percent to $918. Palladium was flat at $852 after registering its

biggest intraday percentage decline since Jan. 25 on Friday. ($1 = 0.8943 euros)

(Additional reporting by Nithin Prasad, Vijaykumar Vedala and Apeksha Nair in Bengaluru, Jan Harvey in London; Editing by David Goodman)