NEW YORK, Sept 23 (Reuters) - Cotton futures finished higher Friday defying a commodity-wide meltdown as mill and commercial buying enabled the market to end the session as virtually the only winner in a beleaguered commodity sector.

Gold hit a 7-week low as it fell a record $100 in a selling spree that kept the metal on track for its third worst day in two decades.

"The lower prices bought buyers out of the woodwork," said Sharon Johnson, senior cotton analyst at commodity brokerage Penson Futures in Atlanta. "I would think we're going to see some follow-through buying next week."

The key December cotton contract on ICE Futures U.S. climbed 1.95 cents or nearly 2 percent to close at $1.0124 a lb, moving from 99 cents to $1.02.

On the week, the market is down 8.4 percent in its worst weekly loss since July 17. On Thursday, it ended at 99.29 cents a lb, marking only the first time since since Aug. 11 when the second position cotton contract closed under the psychological $1 per lb mark.

Total volume traded on Friday hit above 13,200 lots, over 10 percent above the 30-day norm, preliminary Thomson Reuters data showed.

Johnson said the demand from mills and commercial accounts who jumped in when December fell to 99 cents helped offset the gloom over U.S. economic woes and fears over a slowdown in China, the world's top consumer of cotton.

"That proved to be very supportive," she said. Traders said funds could not aggressively sell cotton since their net long position in cotton futures and options was never sizable to begin with.

Speculators in cotton futures and options have held a net long position near 30,000 lots since June. At the height of the rally in cotton in February and March, the net long position of the funds in cotton topped 50,000 lots.

(Graphics: http://r.reuters.com/buv87r )

"Funds were never that long in cotton," Johnson said, adding the selling pressure from that sector petered out fairly quickly. This seemed to be brought by the amount of investor interest in cotton as open interest stood at 148,711 lots as of Sept 22, the lowest level since Sept 6, the exchange said.

The market will now turn its attention to the U.S. Agriculture Department's monthly supply-demand report in October which should give a better idea of the size of the U.S. cotton crop in 2011/12, traders said.

Total volume traded Thursday in the cotton market reached 22,185 lots, versus the previous session's count at 15,954 lots, ICE Futures U.S. data showed.