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SINGAPORE, Sep 21 (Reuters) Gold fell on Thursday despite a weaker dollar, suggesting that market players remained nervous about the outlook for bullion after a recent sell-off.

Huge trading losses at hedge fund Amaranth Advisors LCC also raised fears of more fund selling in the commodities markets, said dealers, who expected bullion to eventually hit $550 -- a level last seen in March.

Spot gold dropped to $575.50/576.50 an ounce from $580.10/581.10 late in New York on Wednesday, when it gained nearly $4 an ounce.

Gold tumbled to its lowest level in nearly three months at $571.20 an ounce on Friday on fund selling.

''We can't rule out that we may go down to $550. But I don't want to be too bearish since we've managed to hold above $570.

It's range trading at the moment, and if we break $570, the bears will rejoice,'' said a dealer in Singapore.

''Sentiment has been affected by Amaranth. People are afraid of a spillover effect. The downside risk is there,'' he said.

Amaranth Advisors LLC, a Connecticut-based hedge fund that lost billions of dollars in natural gas trades in recent weeks, on Wednesday took steps to disband, forging agreements to sell its energy assets and holding talks to sell other parts of the business, people familiar with the situation said.

Amaranth had more than $9 billion in capital under management before disclosing this week that its year-to-date loses may exceed 35 percent because of bad natural gas positions.

The benchmark gold future on the Tokyo Commodity Exchange, August 2007, edged down 2 yen per gram to 2,186 yen ($18.64), having fallen by the daily 60-yen limit the previous day on fund selling and weak crude oil prices .

Dealers expected volatile trading, with the currency markets likely to offer leads.

''I think we are going to find support around $559 if gold does dip lower. I don't expect the market to hit $550 soon,'' said another Singapore dealer.

''In the short term, I see support around $571 and resistance at $589,'' he said.

The dollar inched down after the Federal Reserve left interest rates on hold for the second straight policy meeting and suggested inflation risks were moderating.

The dollar dipped to 117.35 yen from 117.45 yen in late U.S. trade. The euro inched up to $1.2695 , having hit a ession high around $1.2730 following the Fed statement.

Silver edged down to $10.82/10.89 an ounce from 11.02/11.09 an ounce in New York.

Platinum fell to its lowest since June 15 to $1,121 an ounce. It was last quoted at $1,138/1,143 an ounce in New York.

Palladium slipped to $302/307 an ounce from $306/311 late in New York.

Precious Metals Prices by 0218 GMT* Metal Last Net change Pct Move Gold 575.30 -1.00 -0.17 Platinum 1129.00 -9.00 -0.79 Palladium 302.00 -4.00 -1.31 Silver 10.83 -0.04 -0.37 Change in 2006 Metal Latest bid End prev year Pct Move Gold 575.30 517.20 +11.23 Platinum 1129.00 968.00 +16.63 Palladium 302.00 254.00 +18.90 Silver 10.83 8.81 +22.93 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

REUTERS DKS RN0806