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SYDNEY, June 8 (Reuters) Gold lost more than $3 on Thursday in volatile thin-volume trading, partially erasing an overnight recovery as the metal struggled to retest a key resistance level.

A stronger U.S. dollar, holding near a one-month high against the yen, favoured sellers across Asia and kept gold below the technical resistance price of $630.00 a ounce, dealers said.

Spot gold was quoted at $626.25/$627.00 an ounce at 0406 GMT, level with the Sydney open.

Gold tumbled as low as $616.40 an ounce overnight, its lowest since April 21. It was quoted at $629.30/630.00 late in New York.

''That low point in gold brought in some new buyers at that level, but that doesn't seem to be the case at $626,'' a dealer said.

Gold was seen under pressure due to the steadiness of the dollar, which has sparked speculative liquidation.

In less than a month, gold has slipped more than $100 from its 26-year peak of $730.00 an ounce hit on May 12.

The dollar held near a one-month high against the yen on Thursday after another round of comments from a top Federal Reserve official cemented expectations that U.S. interest rates will rise again later this month.

''That's a sign that maybe inflation will stay down,'' another dealer said.

Investors tend to buy gold as a hedge against a weak dollar and inflation and sell when the market moves in the opposite direction.

Spot silver dropped 11 cents from the late New York quote to $11.82/$11.92 an ounce. It retreated to $11.35 at one stage overnight, its lowest since March 30.

Spot platinum was up $15 at $1,235/$1,242 an ounce.

Spot palladium was up $9 at $334/$341 an ounce.

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