AD8338 AGC Discontinuous GAIN

Hi,

In AGC mode, I apply a slowly-AM modulated Input signal (CH1 below).

As the input amplitude increases, the output (SENSOR_OUT = CH2 below), reaches the VOUT_RMS target value of ~250mV, the AGC (attenuation) engages suddenly accompanied by a large spike in SENSOR_OUT level.

As the input amplitude falls, the SENSOR_OUT fails to track the Input (time  = 0-1.8sec below).  In this interval the observed SNR falls rapidly.  That is, the AD8338 output contains in-band noise amplified to 250mVrms.

The Schematic:

I welcome any suggestions as to what causes this behavior and how to correct.

Thanks.