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NEW YORK (Reuters) - Gold hit a 4-1/2 month high before ending slightly lower on Monday, as investors took profits after an early rally on speculation that the U.S. Federal Reserve may unveil another round of monetary stimulus at a central bankers' meeting later this week.
The precious metal, a traditional inflation hedge, received a boost after Fed Chairman Bernanke last week wrote to a U.S. congressional panel that the Fed has room to deliver additional monetary stimulus to boost the U.S. economy.
Bullion investors are awaiting the annual symposium of central bankers and finance ministers at Jackson Hole, Wyoming, where Bernanke is due to deliver a speech on Friday.
The metal rose nearly 3.5 percent last week, its biggest one-week rise since late January, and analysts said gold looked set to rise further after breaking the top part of a four-month-old trading range.
"There certainly seems to be a premium in advance of the potential hint, but the downside is limited as whether Bernanke gives an indication of their intentions or not. Most economists agree the economic measures in the U.S. point to a need for some action soon," said Carlos Perez-Santalla, trader at PVM Futures.
Spot gold hit $1,676.45 an ounce before ended down 0.3 percent at $1,665.20 an ounce by 3:53 p.m. EDT (1953 GMT).
U.S. COMEX gold futures for December delivery, however, settled up $2.70 an ounce at $1,675.60, as the futures market settled prior to a wave of late selling that turned spot prices into losses.
Trading volume was about 60 percent below its 250-day average, preliminary Reuters data showed, as the U.K. market was shut Monday for a bank holiday, and many U.S. trading desks were thinly staffed at the beginning of the last week of traditional summer vacation.
Spot silver eased 0.2 percent at $30.72 an ounce after hitting a near-four-month high of $31.26, building on last week's gain of nearly 10 percent which was its largest weekly rise since last October.
Gold investors will likely stay cautiously upbeat as Bernanke has in the past announced his intention on monetary easing at the Fed's annual symposium at Jackson Hole.
Expectations for a third round of bond-buyback program known as quantitative easing ran high against the backdrop of a U.S. slow and disappointing U.S. economic recovery. However, analysts doubt Bernanke, who prefers not to front-run the central bank's policy-setting committee, will provide clarity on the Fed's plans for its next meeting on September 12-13.
Spot platinum inched down 0.1 percent at $1,539.99 an ounce, having risen 5.4 percent last week, its biggest one-week rise since February. The price has risen after the violence in South Africa, source of 80 percent of the world's platinum.
Spot palladium was unchanged at $648.50 from Friday's late quote.
Additional reporting by Jan Harvey in London and Rujun Shen in Singapore; editing by Jim Marshall, Leslie Gevirtz