(Updates with New York closing prices, market activity)

By Atul Prakash

LONDON, Jan 14 (Reuters) - Gold surged to a historic high above $910 an ounce on Monday as investors rushed to buy the metal on further weakness in the dollar and expectations of a sharp cut in U.S. interest rates.

But the metal pared gains in afternoon European trade as some investors decided to take profits from a rally that saw prices jumping 50 percent in the past year, including a 15 percent rise in the last 30 days.

Gold's surge on the day also prompted buyers to snap up other precious metals, with platinum hitting a record high before giving up some gains. Silver was quoted below a 27-year peak, while palladium traded off its highest in two months.

"It's human nature to buy into a market that is already showing strength. Most fund managers have a herd mentality and they are just attracted to gains. Gold could go higher still, but we don't think this is a right time for buying," said Robin Bhar, metals analyst at UBS Investment Bank.

"From a technical perspective, we would obviously need to see a close above $900 that would be construed as a bullish sign. But fundamentally, we are very cautious and would not advocate going long here because positioning is still extreme. There is a risk of $50-$100 dollar correction at any time."

Spot gold XAU= jumped as high as $914 an ounce before falling to $902.10/902.80 by New York's last quote of 2:15 p.m. EST (1915 GMT), against $895.70/896.50 in New York late on Friday.

The most-active U.S. gold contract for February delivery at the COMEX division of the New York Mercantile Exchange GCG8 settled up $5.70 to $903.40 an ounce.