Flying a 0.055 lbs fixed wing RC in an open park space in early morning. An unleashed dog came running up and created a distraction for a few seconds, at which time the aircraft drifted about 200 yards downwind over nearby residential area. Steered the aircraft back, but at one point the wind and turbulence became too much and the aircraft went down over the residential area. It has so far not been relocated. The winds were much too close to the limits for such a light aircraft.