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LONDON, Apr 3 (Reuters) Gold rebounded on Monday after slipping earlier from highs and targeted the next big level of $600 an ounce, with funds and investors positive about the outlook, analysts said.

The metal was vulnerable to a correction at the start of a new quarter, but physical buyers and bargain-hunters were expected to support and help arrest any sharp drop in prices.

''It's not always a one way street. After prices went up strongly, they consolidated a little bit on Friday,'' said Michael Widmer, precious metals analyst at Macquarie Bank.

''We are still well above the $580 level and it looks pretty good that we are going to get above $600 at some stage. The fund money is the main driver in the market and that has not changed since the cycle began,'' he said.

Gold rose as high as $585.35 and was quoted at $584.70/585.60 by 0923 GMT. The metal matched a 25-year peak of $588.70 on Friday before falling to $581.50/582.40 in late trading session in New York.

Last week's profit-taking was mostly interpreted as a healthy period of consolidation prior to further gains.

Investors were buying on a price dips, dealers said.

''Although selling interest just in front of the $600-mark could be expected to momentarily impede progress higher, the overall sentiment remains positive and with silver providing another pillar of support, gold should break into higher territory sooner rather than later,'' Standard Bank said.

Dealers said an drop to around $575-$582 would bring in fresh buyers, while a rise to $592-$596 might prompt some sell-off in the market.

Silver recovered after sharply falling from a new 22-year peak of $11.91 an ounce on Friday as investors remained convinced that a proposed exchange-traded fund would boost demand.

Silver rose as high as $11.64 before easing to $11.60/11.63, against $11.51/11.54 late in New York.

Some analysts cautioned that prices might slip again.

''Once the tide turns, and it most likely will at some stage, it might get as nasty for the bulls as it is now for industrial end-users and for the few owners of short positions,'' said Wolfgang Wrzesniok-Rossbach, head of precious metals marketing at Germany's Heraeus.

''It seems worthwhile to keep in mind that the white metal has shown in the past its ability to fall much faster than it normally rises,'' he said in a report.

Platinum increased to $1,073/1,077 an ounce from $1,060/1,065 in the U.S. market on Friday when it surged to a record high of $1,093.

Palladium rose to $334/338 an ounce from $331/335.

REUTERS CS HT1645