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SINGAPORE, May 2 (Reuters) Gold hovered below a 25-year high on Tuesday as Japanese investors squared off positions ahead of a long holiday and a rebound in the U.S. dollar robbed the metal of some of its safe-haven appeal.

Spot gold fell to $656.00/657.50 an ounce from $657.60/658.60 late in New York on Monday, when it hit a 25-year high of $661.10 on fund buying sparked by concerns about Iran's nuclear programme.

''Things are a bit over extended at the moment. A lot of people realise that picking the top has been a little futile,'' said a dealer in Singapore.

''They are all fearful of the so-called big decline which may or may not happen. Professional dealers are kind of cautious but investors are still driving the current rally,'' he said.

Gold has risen nearly 28 percent this year as investors diversify into precious metals on record oil prices and tension in the Middle East over Iran's nuclear ambitions.

U.N. ambassadors from the United States, Britain and France are expected to introduce a Security Council resolution this week to make Iran comply with demands to stop its nuclear enrichment.

Failure to do so could result in Tehran facing U.N. sanctions, although Russia and China -- the other two veto-wielding Council members -- say they do not favour such a move for now.

In Japan, the April 2007 gold futures contract on the Tokyo Commodity Exchange hit a low of 2,418 yen per gram before rebounding to 2,430 yen, still 7 yen lower than Monday's close.

The contract rose as high as 2,439 on Monday -- just 1 yen below a 20-year high for TOCOM's key gold contract hit on April 20.

The Japanese markets will be closed from Wednesday through Friday for the Golden Week holiday period.

''At the moment, I think we're lacking a little bit of direction,'' said Darren Heathcote, head of trading at N M Rothschild in Sydney. ''It doesn't look like we've got any particular drivers to push it either down or much higher,'' said Heathcote, who pegged support at $647 and resistance at $662.50.

The dollar rebounded from a one-year low against the euro and a seven-month low versus the yen on a report the Federal Reserve chief said markets had misread his congressional testimony.

The euro was little changed at around $1.2583 and off Monday's one-year peak of $1.2691.

Silver dipped to $13.76/13.86 from $13.90/14.00 in New York and remained below a 23-year peak of $14.68 hit last month.

Barclays Global Investors' long-anticipated ETF, called iShares Silver Trust, traded on the American Stock Exchange on Friday. Each share under the symbol SLV is worth 10 ounces of silver bullion.

Platinum fell to $1,159/1,164 an ounce from 1,167/1,171 in New York. Palladium fell to $372/377 from $379/383 an ounce.

Precious Metals Prices by 0234 GMT* Gold 656.00 -1.60 -0.24 Platinum 1159.00 -8.00 -0.69 Palladium 372.00 -7.00 -1.85 Silver 13.76 -0.14 -1.01 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 656.00 517.20 +26.84 Platinum 1159.00 968.00 +19.73 Palladium 372.00 254.00 +46.46 Silver 13.76 8.81 +56.19 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

REUTERS CS HT0910

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