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LONDON, Aug 3 (Reuters) Gold drifted lower on Thursday as the U.S. dollar gained against the euro, oil eased and selling pressure mounted at higher levels despite the conflict in the Middle East, dealers said.

But the near-term sentiment remained positive and safe-haven gold was seen rebounding to trade above $650 an ounce after some selling, they added.

''This morning in Europe, there was some profit-taking but that's pretty usual. A stronger dollar and weak oil prices are putting some pressure on gold,'' said Alexander Zumpfe, a trader at Germany's Heraeus Metallhandels-Gesellschaft mbH.

''But the overall trend is definitely on the upside and the first upside target for gold would be yesterday's high.'' Spot gold hit $652.75 an ounce before falling as low as $644.70.

It was quoted at $645.90/647.40 by 0943 GMT, against $650.70/651.45 in New York late on Wednesday, when it jumped to a two-week high $655.45.

The dollar rose from this week's one-month lows against the euro as investors awaited signals on future interest rate rises from the European Central Bank.

A strong dollar makes gold costlier for holders of other currencies and often lowers bullion demand.

''We've seen enough in recent weeks that when times have been quiet, gold has been subject to the moves of the dollar,'' said Darren Heathcote, head of trading at Investec Australia.

Oil moved lower as forecasters said Tropical Storm Chris may not become the season's first hurricane on its way toward oil facilities in the Gulf of Mexico. But prices were within sight of record-highs.

The Middle East conflict continued, with Israeli jets pounding Lebanon and troops battling Hizbollah guerrillas on Thursday. World powers struggled for a plan to end a war which Beirut said has killed 900 people and wounded 3,000.

''I guess the downside is limited because you have high oil prices and that the Middle East is getting more tense,'' said a dealer in Singapore.

''But it seems the market can't go up much higher without the help of the physical side. In fact, Indonesia has been selling scraps and bars in the last two days,'' he said.

The physical sector saw persistent selling from jewellery makers and investors in Asia, putting pressure on premiums for gold bars in Hong Kong and Singapore.

In other metals, platinum fell to $1,240/1,245 an ounce from $1,249/1,253 in New York, while palladium dropped to $321/326 from $325/330.

Silver inched down to 12.11/12.21 an ounce from $12.17/12.27 in the U.S. market on Wednesday when it rose to its highest in almost two months at $12.20 an ounce on Wednesday.

REUTERS CS BD1725