* Huge fund long position key to market - analyst
* Investors await speeches by Yellen, Draghi
* Dollar steadies on concern about Fed policy
(Updates prices, market comment; adds byline, NEW YORK dateline) NEW YORK/LONDON, Aug 24 (Reuters) - Gold prices drifted lower on Thursday, pressured by a firmer dollar as investors awaited cues on further interest rate hikes from central bankers meeting in Jackson Hole this week. Losses were limited, however, after a threat by U.S. President Donald Trump to shut down the government unless he got funding for a border wall with Mexico. Geopolitical risk tends to drive buying of safe-haven investments like bullion.
Key to the direction of the market were funds holding huge long positions in Comex gold futures, said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. "We've had two failed attempts at the upside this year which resulted in a flush out of longs, and the longer we stay here without breaking higher, the bigger the risk that these guys will start to get impatient," he said. Gold failed in April and June to break through the top of its broad $1,200-$1,300 range this year. "But at the same time, there's this threat to close down the U.S. government by Trump if he doesn't get his wall so that's providing some underlying support."
Spot gold was down 0.25 percent at $1,286.5 per ounce
The most-active U.S. gold futures for December
delivery settled down $2.70 at $1,292 an ounce. Traders were focused on an annual meeting of central bankers in Jackson Hole, Wyoming, starting on Thursday, where Federal Reserve Chair Janet Yellen and European Central Bank chief Mario Draghi are set to deliver speeches on Friday on the outlook for monetary policy and interest rates. "Gold traders were ambivalent today keeping the metal in a tight range with market hoping that the dashing duo of Draghi and Yellen can dazzle tomorrow at Jackson Hole and provide fresh inspiration," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York. Bullion is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. The U.S. dollar recovered on Thursday, as investors await what message Fed policymakers will send from Jackson Hole and holding gains after U.S. jobless claims were better than expected.
Silver was down 0.56 percent at $16.92 an ounce, while platinum fell 0.18 percent to $974.25 an ounce. Palladium eased 0.16 pct to $931.50 per ounce.
(Reporting by Eric Onstad in London and Devika Krishna Kumar and Chris Prentice in New York; Additional reporting by Apeksha Nair in Bengaluru; Editing by Dale Hudson and Phil Berlowitz)