PRECIOUS-Gold holds below $1,660/oz ahead of U.S. Fed statement
* Gold market cautious ahead of U.S. Fed meeting
* Euro, equities flat after U.S. data
* Spot palladium hits repeated 16-month highs
(Adds comments, updates prices)
LONDON, Jan 28 (Reuters) - Gold held near $1,660 an ounce Monday as investors took to the sidelines ahead of a U.S. Federal Reserve meeting later in the week, hoping the bank will disclose more details on the future of its quantitative easing policy.
Platinum group metals that are used more for industry rose, however, with palladium hitting repeated 16-month highs after strong U.S. durable goods data and sound earnings results more than offset worse-than-expected U.S. pending home sales.
Spot gold was down 0.1 percent at $1,656.66 an ounce by 1609 GMT, after dropping 1.5 percent last week, its sharpest weekly loss in a month. U.S. gold futures for February delivery were down 60 cents an ounce to $1,656.00.
The Federal Open Market Committee (FOMC) policy statement on Wednesday is likely to provide the next short-term direction for gold. Accommodative policy is seen as positive for the metal, as rampant cash printing would prompt currency debasement.
U.S. non-farm payrolls data on Friday will also be examined for more clues on the state of the world's largest economy and positive numbers could lead to a more dovish Fed's stance on monetary easing, analysts said.
"The market is looking at the Fed statement but also at the labour market report to see whether the hopes that the U.S. economy is improving are justified," Bank of America Merrill Lynch analyst Michael Widmer said.
"Gold has been suffering because of higher yields, which are now at around 2 percent, but if the labour market (data) disappoints, the yields could start to fall again and gold may rise," he added.
On the wider markets, the euro hovered near an 11-month high against the dollar on Monday after data showed U.S. durable goods orders rose more than expected last month and on growing optimism about the euro zone economy.
Stock markets were flat in Europe and the United States.
PHYSICAL DEMAND FAILS TO PICK UP
Physical demand was lacklustre compared with the past few years when buying typically surged ahead of the Lunar New Year festival, including in China, which is vying with India to be the world's top gold consumer.
"There is little buying as old stock is yet to be sold," said one dealer with a state-run bullion importing bank in Mumbai. "We are hopeful of the stock getting cleared this week."
Hedge funds and money managers raised their net long bets in U.S. futures and options of gold and silver in the week ended Jan. 22, data from the U.S. Commodity Futures Trading Commission showed.
Spot silver fell 0.3 percent to $30.96 an ounce.
Net length in platinum rose to a record high of 38,097 contracts, and net length in palladium climbed for a second straight week to an all-time high of 18,972 contracts, CFTC data also showed.
Spot palladium rose to $747.50 an ounce, its highest since Sept 2011. It was last up 1.1 percent at $745.22 an ounce.
Spot platinum was up 0.1 percent to $1,680.99, posting a rise of nearly 10 percent so far this year.
"These white metals' stronger links to economic performance and robust supply and demand fundamentals are attracting market interest at the moment," broker UBS said in a note.
"The same could be said about silver in terms of its ties to industrial activity and tendency to benefit from investor friendliness towards risk, but its dual role as a cheaper way to gain gold exposure has somewhat dampened this impact, with gold currently lagging behind the complex."
(Additional reporting by Rujun Shen; Editing by Anthony Barker)