PRECIOUS-Gold dips as buying ebbs ahead of ECB meeting

* Relative strength index shows gold, silver overbought

* Platinum hits 4-month high on South Africa fears

* Coming up: ECB meeting, U.S. payrolls data

By Josephine Mason and Maytaal Angel

NEW YORK/LONDON, Sept 5 (Reuters) - Gold prices dipped from near a six-month high on Wednesday, and trading volume was light as investors sat on the sidelines on the eve of the European Central Bank meeting.

Gold prices stayed within a $9 range a day after testing the $1,700 an ounce level. With just over 100,000 lots changing hands, volume was less than half the 30- and 250-day averages and close to a third of Tuesday's heavy trade.

Investors were waiting for the conclusion of the ECB Governing Council meeting. Bullion has risen 9 percent in six weeks on talk that the ECB will launch a program of purchasing Italian and Spanish bonds, with other steps aimed at lowering borrowing costs for debt-saddled countries.

"The big investors are not committing new money at this stage. Buying on the eve of a big ECB meeting is not wise. To come out and buy today, you're late to the party," said Adam Sarhan, chief executive of Sarhan Capital.

Spot gold edged down 0.14 percent to $1,691.85 an ounce by 3.23 p.m. EDT (1923 GMT). The U.S. December gold contract settled 0.11 percent lower at $1,694.

On Tuesday, spot gold rose to $1,698.45, its highest in nearly six months. Federal Reserve Chairman Ben Bernanke's comment last week on the grave conditions of the U.S. labor market encouraged investors to buy gold on the view that the door was open for more stimulus measures.

The first two rounds of U.S. quantitative easing have boosted gold prices, which have doubled in the last four years. The Fed's next policy meeting is scheduled for next week, but a U.S. jobs report on Friday could affect the decision.

Reports of ECB bond-buying plans boosted the euro and helped push down yields on Spanish and Italian bonds, but sources said the ECB might "sterilize" its bond buying by taking interest-bearing deposits from banks to match the amount spent on bonds.

Such steps could mitigate the risk of inflation and potentially lessen investor interest in gold.

The U.S. Fed is mulling a more accommodative policy involving a third round of quantitative easing, or outright purchases of U.S. government debt, to push interest rates lower.

"The ECB's new bond buying plan is not something likely to cause inflation, it's not quantitative easing, it's entirely different," Natixis analyst Nic Brown said.

Technical analysts said bullion's chances of a break-out above $1,700 per ounce have waned after the price failed to pierce that level on Tuesday.

The Relative Strength Index (RSI) readings on spot gold and silver remained above 70, suggesting they were overbought.

Spot silver fell 0.34 percent to $32.19 an ounce, easing from a 4-1/2-month high of $32.42 hit in the previous session.

SOUTH AFRICA VIOLENCE

Platinum rose to four-month highs just above $1,571 per ounce amid mounting concerns that the violence that has erupted in South Africa, the world's largest producer of the metal used in jewelry and auto catalysts, shows no signs of abating.

Later on, prices eased off those highs and were 0.13 percent at $1,564.74 per ounce at 3:21 p.m. EDT (1921 GMT).

More than 3,000 striking miners marched through streets near the Murikana mine, owned by world No. 3 producer Lonmin, on Wednesday in the largest protest at the hot spot since police shot dead 34 workers last month.

Prices surged 9 percent after the labor dispute turned deadly. Now concerns are escalating that the country's mining industry will get sucked into the trauma as labor disputes spread from platinum to gold.

Palladium was up 0.24 percent at $638.3.