(Updates prices, adds comment) SYDNEY, Dec 16 (Reuters) - Gold recoiled slightly on Tuesday after being pulled to a two-month high by a weaker U.S. dollar and bets the United States will cut interest rates again, taken as a further sign its financial troubles are deepening. Dealers cited some profit taking among arbitrage investors in Asia for bullion's modest retreat from the overnight gains. "Concerns are growing that things are getting worse and that's directing more people into gold," said Graham Tuckwell, chairman of ETF Securities. "If the U.S. goes to zero interest rates, they will want gold, not dollars." Spot gold XAU dropped $4.10 or 0.5 percent to $833.70 an ounce against New York's notional close of $837.80 on Monday. Gold ended nearly 2 percent higher in New York as the dollar slipped to two-month lows versus the euro, with bullion holding advances despite a fizzled oil rally and widespread selling in the share market. Volume was light ahead of announcement on interest rates from the U.S. Federal Reserve later on Tuesday, where rates are tipped to drop by at least 50 basis points. U.S. gold futures for February delivery GCG9 were down 0.22 percent to $834.70 an ounce after settling up $16.00 on the COMEX division of the New York Mercantile Exchange on Monday. The U.S. dollar tumbled to two-month lows against the euro and a basket of currencies on speculation the Fed will cut interest rates to near zero, further eroding the greenback's yield appeal. [USD/] Spot silver droped 4 cents to $10.56 an ounce after rising 3.6 percent on Monday. Platinum group metals also steadied after gaining on hopes for a bail-out of the U.S. automotive industry, as carmakers are major buyers of PGM. Spot platinum was quoted at $823.50 an ounce versus $822.00 in New York, while spot palladium was $1 lower at $173.00 an ounce. (Reporting by James Regan; Editing by Michael Urquhart)

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