(Adds quotes, updates prices)
By Atul Prakash and Veronica Brown
LONDON, Jan 30 (Reuters) - Gold and platinum slipped on
Wednesday in nervous trade as investors took profits ahead of a
decision by the U.S. Federal Reserve on interest rates.
Spot gold <XAU=> fell to $921.65/922.35 by 1613 GMT from
$928.60/929.30 an ounce in New York on Tuesday, when it rallied
to a record high of $933.10.
Losses were briefly extended after robust U.S. private
employers job data countered a report showing
weaker-than-expected U.S. fourth-quarter growth.
The supportive impact of crippled mine output in major
producer South Africa faded as power was restored to some
operations on Wednesday, but traders and analysts said the U.S.
central bank's decision was the solid focus of the day.
"Trading has been pretty volatile with some profit-taking
ahead of the FOMC as the market has built in a 50-basis-point
rate cut. If this happens it keeps the climate positive in
gold," HSBC metals analyst James Steel said.
The Federal Reserve is widely expected to follow up last
week's emergency 75 basis point rate cut, its biggest in a
quarter century, with another cut after its two-day meeting
ending by 1915 GMT on Wednesday.
A U.S. rate cut reduces the opportunity cost of holding
dollar-priced gold and also tends to weaken the U.S. currency
-- making bullion more attractive for non-U.S. investors.
"Today all eyes are on the FOMC meeting and another 50 basis
points rate cut is widely expected. Thus, only a surprisingly
stronger rate cut might be bullish for gold," said Dresdner
Kleinwort, referring to the Federal Open Market Committee.
The currency environment for gold remained favourable as the
dollar stayed on the defensive against a basket of currencies
<.DXY> after the GDP data.
While the chances of gold surging back towards record highs
remained high, some analysts urged caution due to extreme long
positioning on the U.S. COMEX gold futures market.
"We continue to believe that gold is vulnerable to a
pull-back due to elevated speculative and investment positions
and the gap between the current price and the level where we
believe strong jewellery demand would support the metal," said
John Reade, analyst at UBS Investment Bank.
PLATINUM SLIPS
Platinum <XPT=> dropped to $1,684/1,688 an ounce from
$1,705/1,710 in New York on Tuesday, when the metal spiked to an
historic high of $1,735 an ounce.
Dealers said supply concerns persisted even though South
African miners had resumed some operations on Wednesday after
the state power firm promised to boost to boost supplies this
week to mines crippled by outages. []
Anglo Platinum <AMSJ.J>, the world's top platinum producer,
said it had resumed mining at full capacity based on 80 percent
power supplies to its operations, but was not concentrating,
smelting or refining. []
"Platinum is much more fundamentally driven than gold. The
South African situation is critical, given it accounts for
nearly 80 percent of (world) production," Dan Smith, metals
analyst at Standard Chartered said.
"A lot of mines are restarting, which we think is going to
keep the price under pressure for the time being. But we are
long-term bullish. Fundamentally it's still a very tight market
and the question is whether the power cuts are going to be
longer-lasting than the most people think."
In other bullion markets, the benchmark Tokyo gold futures
<0#JAU:> ended 6 yen per gram lower at 3,182 yen, while U.S.
February U.S. COMEX gold futures <GCG8> fell 4.8 percent to
$920.30 per ounce after surging to record highs of $933.30 in
overnight trade.
Silver <XAG=> rose to $16.70/16.76 from $16.68/16.73 an
ounce in New York and Tuesday's 27-year high of $16.80.
Palladium <XPD=> dipped to $387.00/391.00 from $389/392.
(Editing by Chris Johnson)
