* Investors take profits after 2-month high
* Fed seen cutting rates by at least 50 basis points
* SPDR ETF holdings inch higher
(Recasts, adds detail, changes dateline, pvs SYDNEY)
LONDON, Dec 16 (Reuters) - Gold dipped on Tuesday as traders
took profits after the previous session's two-month highs and as
the dollar lifted from lows against the euro, but trading was
muted ahead of a U.S. interest rate decision.
A decision by the Federal Open Market Committee to cut
interest rates would augur well for gold.
Spot gold <XAU=> eased to $833.10/835.10 an ounce at 1044
GMT, down from $837.80 an ounce in New York late on Monday. The
precious metal rose more than 2 percent in that session, hitting
a peak of $844.20, its strongest level since October 16.
"There is a bit of profit taking after the big moves of
recent days," said Stephen Briggs, commodities strategist at RBS
Global Banking & Markets. "And we have had a slight coming off
lows of the dollar versus the euro - that is still a key
driver."
Traders are now awaiting the Fed decision on interest rates,
due at 1915 GMT. The FOMC is widely seen cutting rates by at
least 50 basis points in an effort to stimulate the ailing U.S.
economy. []
Such a move would take rates to just 0.5 percent, their
lowest in half a century. But even if the central bank opts for
a smaller cut that necessary, it will still augur well for gold,
analysts said.
"Whether the Fed cuts by quarter of a point, half a point,
or three quarters of a point, it is all heading in the same
direction, which is interest rates trending towards zero,"
Briggs said.
"That lowers the opportunity cost of holding gold and (adds
to) the growing sense that all currencies are looking
unattractive." He added: "The only alternative to currencies is
gold."
The dollar firmed a touch against the euro after hitting a
two-month low in Asian trade as investors eyed the Fed rates
decision. []
Gold is often bought as an alternative asset to the dollar
and tends to move in the opposite direction to it.
The other main external driver of gold, oil, was a touch
firmer, however, lending a little support to the market.
Stronger oil prices support interest in commodities as an asset
class, and can boost buying of gold as an inflation hedge.
ETF HOLDINGS FIRM
Interest in gold exchange-traded funds remains firm. The
world's largest gold ETF, the SPDR Gold Trust <GLD> said its
holdings rose by just over three tonnes on Monday.
[]
Among other precious metals, platinum <XPT=> was steady at
$821/841 an ounce, against $817 in New York late on Monday.
Palladium <XPD=> was at $171.50/179.50 an ounce from $171.
Traders are awaiting more news on a mooted U.S. plan to bail
out beleaguered carmakers, the main buyers of platinum.
Platinum reached parity with gold for the first time since
1996 on Thursday, and is holding just below the yellow metal.
"Platinum prices may fall further on worsening auto sales
figures, but production cuts must surely start to turn the
market around," Fairfax analyst John Meyer said.
"Platinum is significantly more expensive to produce than
gold and its concentration in South Africa, where mining costs
continue to rise, makes the metal sensitive to the South African
rand."
"A weaker rand might help to keep price levels down but a
weakening US dollar may not help this cause," he added. "Sooner
or later platinum prices must surely pick up, unless we all
suddenly convert to battery powered cars."
Spot silver <XAG=> was quoted at $10.58/10.66 an ounce, down
from $10.62 an ounce.
(Reporting by Jan Harvey; Editing by Sue Thomas)
