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SINGAPORE, May 16 (Reuters) Gold fell to its lowest in a week to around $676 an ounce on Tuesday as fund selling persisted in commodities markets, but dealers said the drop in prices had yet to attract buying from investors and jewellers.

''It's human nature. People have seen a big correction. Are we going to see more?'' said Darren Heathcote, head of trading at N M Rothschild in Sydney.

''I think there's a scope for gold to fall further yet,'' he said.

Spot gold hit $676.80 an ounce, just above key support of $675 an ounce, before rebounding to $684/685 an ounce, higher than $682.60/683.60 late in New York.

Gold, used in jewellery and investment, fell more than 4 percent in the U.S. market on Monday, when a wide financial market sell-off saw base metals, oil and equities buckling under speculative selling from record highs.

Gold hit a 26-year high of $730.00 on Friday on fund buying as investors diversified into precious metals on record-high oil prices, tensions in the Middle East over Iran's nuclear ambitions and uncertainty over the dollar's outlook.

''I am still recuperating from yesterday's hectic trading. There are queries but I don't see much buying interest today,'' said a physical dealer in Singapore.

Dealers said bullion was likely to watch the currency markets for direction, while declines in Japanese futures and industrial metals would weigh on the price.

Chinese copper and aluminium futures dropped by their 4 percent lower trading limit on Tuesday after speculators and funds cashed in on the London Metal Exchange on the previous day.

In Japan, the benchmark gold future on the Tokyo Commodity Exchange, currently April 2007, fell by its daily 60-yen limit to 2,516 yen ($22.82) per gram as sell-offs in London and New York prompted active follow-through sales by Japanese investors.

''I think it's accepted that it's probably moved way ahead of fundamentals in the recent last couple of weeks as far as gold is concerned,'' said Heathcote.

''On the back of my mind, I seem to feel it has ... that strong bull run, you know, getting ahead of itself,'' he said.

Platinum fell to $1,262/1,270 an ounce from $1,270/1,278 late in New York and off last week's record high of $1,334 an ounce.

Refiner Johnson Matthey released its widely anticipated annual review on Monday, saying the market is expected to register a deficit for the eighth year in a row. Palladium was little changed at $363/370 an ounce, having fallen to its lowest in nearly three weeks to $352 an ounce on Monday due to fund selling.

Silver fell to its lowest in nearly three weeks to $13.04 before rebounding to $13.26/13.36. The metal was last quoted at $13.29/13.30 in New York.

Silver hit a 25-year peak of $15.17 last week.

In the currency market, the dollar bought 110.65 yen in early trade, up from around 110.50 in late U.S. trade on Monday and well above an eight-month low of 109.31 hit late last week.

Dealers await the April producer price index due at 1230 GMT for clues about the Federal Reserve's next move.Economists forecast a median 0.8 percent rise compared with a 0.5 percent increase in March.

Precious Metals Prices by 0237 GMT* Last Net Change Pct Move Gold 683.60 3.00 +0.44 Platinum 1267.00 -3.00 -0.24 Palladium 362.00 -1.00 -0.28 Silver 13.26 0.11 +0.84 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 683.60 517.20 +32.17 Platinum 1267.00 968.00 +30.89 Palladium 362.00 254.00 +42.52 Silver 13.26 8.81 +50.51 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

($1=110.26 yen) REUTERS CS RS0930