PRECIOUS-Gold slides 1% after Fed cuts rates, but policy outlook uncertain

* U.S. Fed cuts rates for a second time this year

* Focus now on Bank of Japan on Thursday

* Oil prices ease after surge on Saudi attack (Adds comments, updates prices)

Sept 18 (Reuters) - Gold prices fell over 1% to a one-week low on Wednesday, pulled down by a lack of clarity on future monetary policy decisions after a widely anticipated interest rate cut by the U.S. Federal Reserve.

The U.S. central bank went ahead with an expected interest rate cut of 25-basis points for the second time this year, but gave mixed signals about what may happen next.

Spot gold dropped to $1,487.35 per ounce at 02:50 p.m. EDT (1850 GMT). U.S. gold futures settled up over $2, or 0.2%, at $1,515.80.

“Gold retreated $10 from just before the release as the Fed slightly disappointed the market as only 7 out of 17 members saw one more rate cut by the end of this year,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

“The projections for 2020/21 were also measured and long term view remains unchanged,” Wong added.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

The dollar index gained 0.4% versus major currencies, further pressuring the precious metal.

Investors are now focused on the Bank of Japan’s policy meeting on Thursday.

Meanwhile, safe-haven buying of bullion was limited when oil prices slid after Saudi Arabia said it would restore crude production hit by attacks on facilities that prompted oil prices to spike earlier this week.

Gold is considered a hedge against oil-led inflation.

Among other precious metals, silver fell 2.3% to $17.60 an ounce, while platinum fell about 2% to $924.40.

Palladium fell 0.9% to $1,584.06 after it hit a record of $1,626.81 on Monday.

“(In terms of) overall fundamentals for palladium, we have a significant deficit that has to be financed from above ground stocks, with the prospect of increased supply limited,” said James Steel, chief precious metals analyst at HSBC.

“Mine supply in the short term cannot respond to the high price so we have to mobilize above ground stocks and the (palladium) market consequently is tight. So we do get periodic profit-taking and we’ve had a spate of negative news from the auto industry but despite that, it’s tight.” (Reporting by Asha Sistla and Swati Verma in Bengaluru Editing by David Gregorio and Alistair Bell)