* Lower oil, profit taking drag gold down
* Largest gold ETF reports biggest inflow since August 23
* Gold premiums in India hit $120/oz (Updates prices)
By Marina Lopes and Jan Harvey
NEW YORK/LONDON, Oct 23 (Reuters) - Gold was slightly lower on Wednesday as investors sold to lock in profits after prices hit four-week highs a day earlier in reaction to weaker-than-expected U.S. non-farm payroll data and sold in reaction to a weaker oil market that dragged commodities down.
The metal rose nearly 2 percent on Tuesday while the dollar index hit eight-month lows and stock markets rallied, after weak U.S. jobs data cemented expectations for the Federal Reserve to keep its stimulus measures in place until next year.
Prices were lower on Wednesday even as the U.S. dollar remained under pressure. U.S. stocks were lower, while U.S. bonds extended Tuesday's gains.
"Crude oil is having a large impact on the commodities sector, dragging everything down," said Paul Sacks, principal gold trader at Aurum Options Strategies in New York.
U.S. crude fell toward $96 a barrel and its lowest since July in reaction to ample supplies and a further inventory build-up in the United States, the world's top consumer.
Profit taking from Tuesday's rally to the market's loftiest level since Sept. 20 also pushed down prices as investors saw little additional upside, analysts said.
"Yesterday's bounce fizzled out very quickly, which is another sign that rallies are really seen as selling opportunities ... and people don't expect much higher prices," ABN Amro analyst Georgette Boele said.
Spot gold was down 0.5 percent at $1,332.95 an ounce at 16:25 EDT (2025 GMT), after hitting $1,344.46 on Tuesday.
U.S. gold futures for December delivery settled down $8.6, or 0.6 percent, at $1,334.
Commerzbank's technical analysts, who study past price patterns to determine the next likely direction of trade, said gold's rally on Tuesday had neutralized their bearish view on the metal, although it remains vulnerable to further losses.
"As long as the 1,330.17/1,349.31 resistance area -- July, late September and early October highs and the 55-day moving average -- caps on a daily chart closing basis, we will continue to favor the downside," they said in a report.
The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, reported an inflow of more than 6 tonnes on Tuesday, its biggest one-day inflow in two months. On Monday it saw an outflow of more than 10 tonnes.
Gold premiums in India hit $120 an ounce to London prices on Tuesday as the domestic market failed to get enough supply to meet strong festive demand.
Among other precious metals, silver was down 0.4 percent at $22.54 an ounce, having also touched a one-month high on Tuesday at $22.80.
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, fell to its lowest since mid-September on Wednesday at 59.01 as silver outperformed.
Spot platinum was down 0.9 percent at $1,430.74 an ounce, while spot palladium was down 1.07 percent at $743 an ounce. It hit a near two-month high of $752.50 on Tuesday. (Additional reporting by Clara Denina; Editing by Keiron Henderson and David Cowell in London; Editing by Josephine Mason in New York and Bob Burgdorfer)