* U.S. gold futures hit lowest in 15 months
* Commodities, equities fall, dollar climbs
* ETF outflows, Cyprus gold sales still spooking market (Updates prices)
By Clara Denina and Jan Harvey
LONDON, April 12 (Reuters) - Gold dropped more than 4 percent on Friday to its lowest since July 2011, breaking below $1,500 per ounce as bearish factors including a draft plan for Cyprus to sell bullion forced prices to capitulate.
Gold hit a low of $1,493.35. The metal was heading for a 5.3 percent decline this week, its third such drop in a row and biggest since December 2011. Gold is now some 22 percent below the record peak hit in September 2011 at $1,920.30.
U.S. gold futures also hit their lowest since July 2011, with gold for June delivery falling to a low of $1,491.40 an ounce before recovering to $1,500.40, down 4.3 percent.
"The scale of the decline has been absolutely breathtaking. We tried to rally and that just didn't get anywhere... there hasn't been any downside support, it's like a knife through butter," Societe Generale analyst Robin Bhar said.
Precious metals sold off across the board with silver the biggest faller, down 5.1 percent. Other commodities also came under pressure, with Brent crude oil hitting an eight-month low.
An unexpected contraction in U.S. retail sales pushed stock markets lower, with European shares down 1 percent and Wall Street down at the open. The dollar rose, meanwhile, climbing 0.1 percent against the euro.
"We've broken the key support level (around $1,535-40 per ounce) - that's 20 percent below the $1,923 Comex all time peak - so we're now into a bear market," Bhar said.
A European Commission assessment of what Cyprus needs to do as part of its European Union/International Monetary Fund bailout showed earlier this week it is set to sell its excess gold reserves to raise around 400 million euros ($525 million).
While Cyprus' gold sale in itself is small, heavily indebted euro zone nations such as Italy and Portugal could find themselves under increasing pressure to put their bullion reserves to work as a result of its plan.
"The news on Cyprus' possible gold sale puts the focus back on the fact that many central banks in the developed world have been selling gold in the past few decades and they are still not so keen to hold gold as they used to be," Danske Bank analyst Christin Tuxen said.
LONG-TERM TREND SUPPORT BREACHED
Gold's losses accelerated sharply when it fell through key support at $1,521 an ounce, its December 2011 low. That formed the base of the broad sideways trend channel it has held within since its drop from record highs in September 2011.
A fall below this key area of support could signal further losses are on the way, according to analysts who study past price patterns for clues on the future direction of trade.
Commerzbank said in a weekly technicals report that a break through this level was "medium term bearish" and could lead to the 200-week moving average at $1,434.15 being eyed.
Wary investors continued to cut exposure to gold, with total holdings at the world's major bullion gold-backed exchange-traded-funds (ETFs) falling to their lowest since early 2012.
Holdings of the largest fund, New York's SPDR Gold Trust fell a further 2.1 tonnes, or 67,710 ounces on Thursday, after a 17-tonne outflow on Wednesday.
"Investors are still cautious and you see that looking at the continued ETFs outflows," Standard Chartered analyst Daniel Smith said.
Financial market watchers are awaiting the outcome of a two-day meeting in Dublin beginning on Friday. Euro zone finance ministers there said the necessary elements are now in place to launch national procedures to endorse a 10 billion euro bailout fund loan for Cyprus.
Silver was down 5.1 percent at $26.19 an ounce. Spot palladium was down 2.5 percent at $710, while spot platinum was down 2.8 percent at $1,489.49 an ounce. ($1 = 0.7618 euros) (Editing by Veronica Brown and James Jukwey)