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SINGAPORE, Aug 8 (Reuters) Gold was trapped in a range ahead of the U.S. Federal Open Market Committee's interest-rate-setting meeting on Tuesday, which may offer fresh impetus for the precious metal to repeat a recent rally.

Some investors could be tempted to sell the dollar and buy gold with the Fed widely expected to hold rates steady at 5.25 percent after more than two years of raising interest rates, said dealers.

Spot gold hit a high of $649.75 an ounce before dipping to $647.25/648.00 an ounce, little changed from $647.60/648.35 an ounce late in New York on Monday Gold rose more than $3 an ounce in the U.S. market on rising oil prices dollar weakness and war between Israel and Hizbollah. The metal has moved back and forth since rising to its highest in two weeks of above $655 an an ounce last Wednesday.

''I would expect there's a good chance we'll want to test through $650 if the Fed holds (rates),'' said Darren Heathcote, head of trading at Investec Australia in Sydney.

''A majority in the market now seem to be of the concensus that they are likely to hold on rates, which I would not object to,'' said Heathcote, who expects gold to trade between $645 and $650 ahead of the Fed decision.

Dealers said the next resistance may be between $660 and $680 an ounce and then the 26-year peak in mid-May of $730 an ounce.

The dollar was within sight of two-month lows against a basket of currencies as investors waited to see whether the Fed would pause a two-year credit tightening cycle. Dealers will scour the post-meeting statement for clues on any further credit tightening.

The dollar was little changed at 115.10 yen The euro eased to $1.2820 from nearly $1.2840 in late New York trade.

Dealers noted early short covering in Japanese gold futures as the crude oil held within sight of Monday's all-time high of $78.64 a barrel.

But the buying subsided and benchmark gold futures on the Tokyo Commodity Exchange dropped 2 yen per gram to 2,422 yen ($21.05) per gram.

''We saw some buying interest from overseas but the price is kept on the range. I don't expect much movement before New York comes in,'' said Louis Lok, dealer at the Bank of China in Hong Kong.

In other precious metals, platinum fell to $1,244/1,248 an ounce from $1,250/1,255 late in New York. Sister metal palladium fell to $322/327 from $323/328.

Silver inched up to $12.30/12.37 an ounce from $12.24/12.29 late in New York.

Precious Metals Prices by 0356 GMT* Metal Last Net change Pct Move Gold 647.40 -0.20 -0.03 Platinum 1244.00 -6.00 -0.48 Palladium 322.00 -1.00 -0.31 Silver 12.30 0.06 +0.49 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 647.40 517.20 +25.17 Platinum 1244.00 968.00 +28.51 Palladium 322.00 254.00 +26.77 Silver 12.30 8.81 +39.61 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

($1=115.06 yen) Reuters BDP SP1119