Gold firmed on Wednesday, having briefly tested support below $800 per ounce, leaving investors nervy over the prospect of more falls from recent 28-year highs.

Analysts said the market was taking its cue from a firmer tone on oil and dollar weakness versus the euro, as bullish momentum had cooled after sharp drops from last week's high at $845.40 -- last seen in January 1980.

Spot gold rose to $810.80.811.60 by 5:57 a.m. EST, having dipped to $799.40 in Asia overnight and up from $798.10/798.90 quoted late in New York on Tuesday.

We're trading either side of 800 at the moment although the market is looking remarkably strong ... being driven by FX moves, said Simon Weeks, director of metals sales at Bank of Nova Scotia.

The dollar was back on the defensive against the euro reflecting continuing worries that a struggling U.S. housing sector and lingering credit problems could hurt the wider economy.

Dollar weakness makes dollar denominated gold cheaper for non U.S. investors but analysts were wary of ruling out further losses for the metal as wider investment momentum had cooled.

As we proceed to the year-end, there could be some more profit taking. These volatilities are symptomatic of investors' desire to lock in profits and adjust portfolios, said Pradeep Unni, an analyst with Vision Commodities in Dubai.

It remains to be seen whether this drop will attract physical buyers again. Near-term psychological support is spotted around $799, a breach of which would take the market to $780.

DATA

Crude oil advanced strongly, moving above $92 a barrel after losing more than $5 in the past two sessions, with analysts expecting U.S. government data due on Thursday to show declines in inventories.

The gains in oil highlighted gold's role as a hedge against oil-led inflation, but crude prices were still well away from a record $98.62 touched a week ago.

In other bullion markets, the key gold futures contract for October 2008 delivery on the Tokyo Commodity Exchange ended 25 yen per gram higher at 2,912 yen due to a weaker Japanese currency.

U.S. COMEX golf futures for December delivery were up $12.50 at 811.40 per ounce.

In other precious metals, platinum firmed to $1,435/1,440 an ounce from $1,415/1,420 in late New York on Tuesday, when it rose about 2 percent on an industry report supporting bullish views on the white metal.

The world platinum market would end 2007 in a big deficit, with the metal seen hitting a record high of $1,575 in six months on strong fundamentals and buoyant gold prices, said Johnson Matthey, the world's top platinum refiner and fabricator.

In mining, the world's third biggest platinum producer Lonmin Plc posted an 11.4 percent rise in annual pretax profit on Wednesday as lower finance charges offset weaker output and higher costs, boosting its shares.

The firm repeatedly trimmed its production outlook during the year due to problems at its mines and in processing operations, including a furnace that had to be rebuilt..

Palladium was unchanged at $369/373 an ounce. Silver rose to $14.96/15.01 an ounce versus $14.65/14.70 in New York on Tuesday.

(Additional reporting by Lewa Pardomuan in Singapore)

(Reporting by Veronica Brown; Editing by Chris Johnson)

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