* U.S. retail sales rise unexpectedly in April
* Euro weakens after ECB official comment on deposit rates
* ETF gold holdings slip again (Updates prices, adds comment, detail)
By Clara Denina and Harpreet Bhal
LONDON, May 13 (Reuters) - Gold fell more than 1 percent on Monday, holding near its weakest level in two weeks, as the dollar firmed on signs of an improving U.S. economy and as holdings in exchange-traded funds slipped again.
Gold dropped around $14 to $1,432.61 an ounce by 1328 GMT, not far from Friday's low of $1,420.61, its weakest since April 24. Gold plunged to its lowest level in more than two years at $1,321.35 on April 16 after worries about central bank sales and a drop below $1,500 led to a sell-off that stunned investors. It is down 14 percent on the year.
U.S. gold for June delivery fell 0.4 percent to$1,431.50 an ounce.
Bullion's safe-haven appeal has been dimmed by speculation the Federal Reserve could scale back its aggressive monetary stimulus after recent U.S. economic pointed to a steady recovery trend in the world's largest economy.
"We're seeing strength in the U.S. dollar and continued outflows out of gold ETFs and these factors are weighing on gold prices," said Carsten Fritsch, analyst at Commerzbank.
"In the very short term we could see a drop in gold prices towards $1,400 an ounce or below that but prices are unlikely to collapse. And in the second half of the year we expect to see some recovery in prices."
The dollar strengthened against the euro and a basket of currencies after data showed U.S. retail sales unexpectedly rose in April as households bought automobiles, building materials and a range of other goods, pointing to underlying strength in the economy.
The single currency earlier rose against the euro after European Central Bank policymaker Ignazio Visco said if the euro zone economy needed more help, the deposit rate could be cut to negative territory.
INVESTORS DIVEST
Hedge funds and money managers trimmed their bullish bets in gold futures and options in the week to May 7 on weaker bullion prices and outflows in gold exchange-traded funds, a report by the Commodity Futures Trading Commission (CFTC) showed on Friday.
Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund (ETF), fell 0.24 percent to 1,051.65 tonnes on Friday after rising slightly on Thursday. The holdings stood at a four-year low.
Gold shrugged off Chinese data which showed output growth quickened in April, but still missed market expectations.
"Given subdued inflation on both sides of the Atlantic, and damaged investor sentiment, a stronger dollar still represents a major upside hurdle for gold prices," VTB analyst Andrey Kryuchenkov said in a note.
Other precious metals tracked gold lower, with silver down 0.3 percent to $23.76, platinum falling 0.7 percent to $1,479.99 an ounce. Palladium was up 0.3 percent to $705.47 an ounce. (Additional reporting by Lewa Pardomuan in Singapore; Editing by William Hardu)
