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SYDNEY, June 6 (Reuters) Gold tumbled on Tuesday by more than 1 percent on a strong dollar and profit taking after heading higher overnight as oil prices rose.

The drop wiped out Monday's earlier advance and left gold a few dollars under a key technical resistance mark of $640 an ounce, which dealers said could be difficult to breach, given light volumes.

Selling across Asia drove bullion as low as $633.80 an ounce, underscoring wider-than-usual range trading as investors weighed renewed strength in the greenback and another leap in oil.

Spot gold was quoted at $636.25/$637.00 an ounce. Late in New York, it was quoted around $643.00, but traded as high as $645.00 overnight.

Silver was swept lower on gold's negative turn, returning an overnight gain of 2 percent.

The dollar held on to gains on Tuesday after traders took Federal Reserve Chairman Ben Bernanke's pledge to keep an eye on inflation risks as a sign that U.S. interest rates would keep climbing.

''Some took that as a sign to sell,'' a bullion dealer said.

But gold-selling was tempered on expectations of a further rise in oil prices after Iran warned Washington that a ''wrong move'' in the standoff over Tehran's nuclear ambitions would endanger flows from the Persian Gulf, which pumps nearly a quarter of the world's crude.

Iranian officials previously had said Tehran would not use oil as a weapon.

Higher oil prices could spark a rise in inflation, bringing into play gold's role as a hedge against a downturn in the dollar's buying clout.

''Perhaps the main news for gold is that Iran has hinted that it may use its oil production as a bargaining tool in its dispute over nuclear policy with the U.S.,'' Goldman Sachs JBWere said in a client note.

''Concerns over Iran's production certainly have contributed to the rise in oil prices, but the uncertainty could also see investors head back to gold,'' it said.

Gold fell as low as $618.50 last week in step with a rising dollar, down 15 percent from its recent highs.

The dollar was higher at 112.23 yen after gaining nearly half a percent on Bernanke's comments.It was at 1.2900 per euro down slightly from late U.S. trade but kept most of its recent gains.

Spot silver dropped 37 cents, or 3 percent, from the late New York quote to $11.95/$12.05 an ounce.

Spot platinum was down $3 at $1,248/$1,256 an ounce.

Spot palladium was down $2 at $354/$362 an ounce.

REUTERS CH RN0949