PRECIOUS-Gold drops over 4% as investors take profits after record high

By Anmol Choubey

Jan 29 (Reuters) - Gold dropped over 4% on Thursday as investors took profits after a record high, yet prices remained on course for their best month since the 1980s amid heightened economic and geopolitical uncertainty.

Spot gold XAU= was 4.6% lower at $5,149.99 an ounce by 10:48 a.m. ET (1548 GMT), after earlier touching $5,594.82.

U.S. gold futures GCcv1 for February delivery were down 2.8% at $5,156.20.

"We are seeing a dramatic sell-off after precious metals made new recent all-time highs," said David Meger, director of metals trading at High Ridge Futures.

However, spot gold prices are still up 19% for the month and 3.6% so far this week.

From crypto money to central banks, demand for gold is widening as "precious metals are well in the limelight and investors always like to go where they can get high returns," said GoldSilver Central managing director Brian Lan.

Adding to geopolitical uncertainty, U.S. President Donald Trump on Wednesday pressed Iran to negotiate a nuclear deal, while Tehran threatened retaliation against the U.S., Israel, and allies.

On Wednesday, crypto-group Tether's CEO said it plans to allocate 10%-15% of its investment portfolio to physical gold, while the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, saw holdings at a nearly 4-year high.

The U.S. Federal Reserve left rates unchanged on Wednesday, as investors awaited Trump's announcement of a replacement for central bank chair Jerome Powell, whose term ends in May. Markets expect the central bank to next trim rates in June.

Spot silver XAG= lost 6.6% at $108.84 an ounce after reaching $121.64. It has surged more than 50% so far this year, fuelled by supply deficits and momentum buying.

The silver, platinum and palladium markets are small relative to gold or the S&P 500, making them vulnerable to speculative inflows that have left prices "totally detached from where physical demand is robust," said Guy Wolf, global head of market analytics at Marex.

Spot platinum XPT= fell 1.7% to $2,650.15 an ounce, having hit a record high of $2,918.80 on Monday, while palladium XPD= dropped 6.7% to $1,935.