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TOKYO, June 12 (Reuters) Gold edged down on Monday after rising modestly on short covering in early trade as investors were careful about chasing prices actively due to the recent strength of the dollar and weakness in global equity markets.

Gold was vulnerable to further liquidations, with falls in industrial metals, such as copper, also weighing on sentiment.

Around 0404 GMT, spot gold was at $605.00/605.70 an ounce, down from $605.45/606.45 late in New York on Friday.

Early rounds of short covering pushed up the spot price to a session high of $609 an ounce, but the buying mood quickly ran out of steam after some profit-taking orders around $610, traders said.

''$600 is seen as an important level, but there is no strong factor to be confident that level would be supported,'' said Shuji Sugata, assistant manager at Mitsubishi Corp. Futures and Securities Ltd.

''In this kind of mood, the market wants to keep positions very light.'' Sugata said active, follow-through selling would emerge should the spot price fell below $600.

The 100-day moving average (MA) for spot gold was seen around $600, while the next key support was seen around $545, which is the 200-day MA.

Spot gold shot to a 26-year peak of $730 on May 12 but has suffered a steep correction in the past several weeks. It fell as low as $600.65 on Friday.

Gold could find support as U.S. crude oil futures have been above $71 a barrel since Friday as violence continued in Iraq despite the death of a top al Qaeda leader.

But the market was focusing to the dollar, share prices and U.S.

interest rates.

Investors usually buy gold as a hedge against a weak dollar and inflation and sell when the market moves in the opposition direction.

''People want to lighten their positions in gold, base metals and other commodities as they can feel that liquidity is falling,'' said a senior trader at a Japanese trading house.

''At times when commodities are in a major downward correction phase and when stocks are falling, investors want to lock in their profits from commodities and shift those proceeds into deposits or into bonds until they can fully determine the trend.'' Falls in spot gold weighed on Tokyo gold futures and other yen-based precious metals.

Key most distant April gold futures on the Tokyo Commodity Exchange dropped to a two-month low of 2,240 yen ($19.65) a gram, down 18 yen or 0.8 percent from Friday's close.

Silver fell to $11.05/11.15 an ounce from $11.14/11.24 late in New York.

Platinum edged down to $1,186/1,193 an ounce compared with $1,188/1,193 in New York on Friday.

Sister metal palladium fell to $313/320 an ounce from $317/322 on Friday.

($1=113.97 yen) REUTERS DKS SSC1150