NEW YORK, Aug 9 (Reuters) - Cotton futures closed near a
10-month low Tuesday on follow-through investor sales as fiber
contracts struggled from the prospect of weakened demand after
the turmoil inspired by the U.S. downgrade, analysts said.

The U.S. Federal Reserve said it will keep its hefty
monetary policy stimulus for at least another two years.

Global stocks pared gains in volatile trade
after the Fed announcement.

Gold soared to near $1,800 an ounce in its biggest
three-day rally since 2008.

'We're trading the (macro outlook),' said Keith Brown,
president of commodity firm Keith Brown and Co in Moultrie,
Georgia.

The key December cotton contract on ICE Futures U.S.
dropped 1.92 cents, or almost 2 percent, to end at 95.80 cents
per lb, dealing from 93.72 cents to $1.0039.

It was the lowest settlement for the second position cotton
contract since the middle of September 2010, Thomson Reuters
data showed.

Total volume traded hit almost 17,000 lots, over a fifth
above the 30-day norm, Reuters data said.

Fundamentally, the market is looking forward to the U.S.
Agriculture Department handing out its first monthly supply
report for the 2011/12 marketing year (August/July) on
Thursday.

'I think the focus there will be mainly on demand. We need
to see what kind of offtake we are going to see in the coming
season,' a dealer said.

Total volume traded Monday hit 15,546 lots, almost a fifth
under the 30-day average, ICE Futures U.S. and Thomson Reuters
data showed.

Open interest was at 142,813 lots as of Aug. 8, against the
previous session's 143,489 lots, exchange figures showed.