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SINGAPORE, July 31 (Reuters) Gold rose but then dropped on Monday after gaining nearly $2 in New York on late short covering, and dealers said the metal would be trapped in a tight range until new leads emerged.

Spot gold hit a high of $638.50 an ounce before retreating to $636.00/637.00, slightly higher than $635.40/636.40 late in the U.S. market on Friday, when slower-than-expected U.S.

economic growth hit the dollar and ignited demand for gold.

The Japanese market was also volatile, with key contract losing early gains to profit taking. The benchmark June gold future on the Tokyo Commodity Exchange added 1 yen per gram to 2,364 yen ($20.62), having traded as high as 2,376 yen.

''Let's give it a $10 range. It may go down to $620 and then go up to $650. If you really ask me what the market is doing, I would say, it's going to be range trading,'' said a dealer in Singapore.

''It's going to be a tecnically driven session. I mean people will buy at lower levels and sell at the high. There are no factors at the moment,'' he said.

Some dealers said players were reluctant to establish sizable long positions ahead of the next round of central bank rate decisions in August. Summer holidays also slowed trade, they said.

The dollar was under pressure after slow U.S. growth data for the second quarter further dampened expectations the Federal Reserve would boost interest rates at its meeting next week.

The euro was little changed around $1.2765 The dollar fell late last week after data showing U.S.

gross domestic product grew at a 2.5 percent annual pace in April-June, below the forecast for 3.0 percent and slowing from 5.6 percent in the first quarter.

Fading chances the Fed will raise rates for the 18th consecutive time to 5.5 percent from 5.25 percent when it meets on Aug. 8 has boosted the allure of the euro.

Platinum rose to $1,223/1,228 an ounce from $1,220/1,224 late in New York.

Sister metal palladium was unchanged at $310/315.

Silver inched up to $11.38/11.45 an ounce from $11.30/11.40 late in New York.

Precious Metals Prices by 0358 GMT* Metal Last Net change Pct Move Gold 636.00 0.60 +0.09 Platinum 1222.00 2.00 +0.16 Palladium 310.00 0.00 +0.00 Silver 11.38 0.08 +0.71 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 636.00 517.20 +22.97 Platinum 1222.00 968.00 +26.24 Palladium 310.00 254.00 +22.05 Silver 11.38 8.81 +29.17 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

($1=114.63 yen) REUTERS AD HS1143