By Frank Tang and Veronica Brown
NEW YORK/LONDON (Reuters) - Gold prices fell on Wednesday, extending the previous session's 1 percent pullback, due to technical weakness and strength in the dollar.
Platinum prices climbed on supply worries as South Africa's Impala Platinum shut its mine a day before a planned strike over miners' wages.
Analysts said bullion's positive start to 2014 looked to be fading due to the prospects of an improving U.S. economy and expectations for further Federal Reserve stimulus reduction.
Gold's repeated failure to break above key technical resistance at $1,260 an ounce prompted investors to take profits. On Tuesday, gold reversed early gains to end nearly 1 percent lower for its biggest one-day drop so far this year.
"Having once again seen that the 'seller' at the $1,250-1,255 level was formidable ... we have no choice but to reduce our exposure a bit," said independent trader Dennis Gartman.
Spot gold fell 0.4 percent to $1,235.80 per ounce on the day by 4:15 p.m. EST (2115 GMT).
U.S. COMEX gold futures for February delivery settled down $3.20 at $1,238.60 an ounce.
Turnover was weaker than usual, with trading volume at about half of its 250-day average, preliminary Reuters data showed.
A stronger dollar also triggered profit-taking in the precious metal.
Dealers and analysts said concerns about further trimming of U.S. central bank stimulus, which weighed on prices last year, were back on the agenda.
The Federal Reserve holds its next policy meeting on January 28-29 when markets think the U.S. central bank will announce a second cut to its massive monthly bond purchases, which had burnished gold's inflation-hedge appeal.
In other market news, sources said banks involved in the gold fix are reviewing the mechanics of its process to try to ensure that the benchmark complies with upcoming regulations.
CHINA PREMIUMS EASE
Asia-based traders said prices could fall further as Chinese physical purchases were also slowing after strong demand earlier this year for the Lunar New Year holiday at the end of January.
Platinum was up 0.3 percent at $1,452.74, consolidating after hitting a three-month peak recently as strikes were set to begin on Thursday at the South African mines of top producers.
Impala Platinum shut all its South African operations on Wednesday, a day before the planned strike over wages across the country's platinum belt by the hardline Association of Mineworkers and Construction union (AMCU).
Silver fell 0.6 percent to $19.73 per ounce, while palladium inched up 7 cents to $743.97.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Stephen Powell, Marguerita Choy and Jonathan Oatis)