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SINGAPORE/TOKYO, Aug 18 (Reuters) Gold fell to its lowest level in more than three weeks on Friday after declines in crude oil prices ignited selling from speculators, but the lower levels attracted purchases from bargain hunters and jewellery makers.

Platinum also hit a three-week low before rebounding and palladium dropped as much as 2.7 percent after spiking to a 10-week high of $338 the previous day on technical buying and purchases from Chinese jewellery makers. Silver hovered below $12 an ounce.

Talk that central banks might be selling gold resurfaced but there was no confirmation, said dealers.

Spot gold hit a low of $611.90 an ounce before rebounding to $614.10/614.90 an ounce, still down from $615.10/615.85 late in New York on Thursday, when it dropped nearly 2 percent.

Silver , which normally tracks gold, edged down to $11.90/11.97 an ounce from $11.94/12.04 late in New York.

''Generally people are caught long. It could really be central bank selling, that's why we broke $630 and came crashing down to this level. But I think the price drop is normal,'' said a dealer in Singapore.

''I don't expect much activity in Asia and if anything, Asians will be buying gold at this level, not selling. We are still within the range of $600 and $650 and there's nothing to be excited about,'' he said.

Benchmark gold futures on the Tokyo Commodity Exchange plunged by the daily 60 yen limit to 2,304 yen per gram on active technical selling given this week's falls in oil prices.

Gold is used in jewellery and often bought as an investment that can be sold in times of trouble.

''It's looking a bit bearish for gold but it's still probably going to find pretty good support at $600. It's more like that $625 on the top side again now,'' said Darren Heathcote of Investec Australia in Sydney.

Declines in crude oil and a truce in Lebanon may reduce gold's appeal as a hedge against inflation, but Heathcote said geopolitical tension remained and that would offer some support.

''Whether that (truce) holds or not is still yet to be found out. If that blows up again, the oil price will no doubt go with it,'' he said.

Oil prices have come under pressure after a ceasefire took hold in Lebanon and BP said it would keep pumping from half of its 400,000 barrel-per-day (bpd) Prudhoe Bay oilfield during pipeline repairs.

''Weak oil is the key factor putting selling pressure on gold, but we still haven't seen major liquidations,'' said Shuji Sugata, assistant manager at Mitsubishi Corp. Futures and Securities.

''The trend for gold is weak and we need to see if further sales emerge next week when more players come back from holiday,'' Sugata said. Still, gold could gain support if geopolitical tensions intensify again, as plenty of buyers are looking to buy gold for investment purposes on price dips.

A U.N. Security Council resolution adopted on Aug. 11 called for a truce and a peacekeeping force to help the Lebanese army supervise the pull-out of Israeli troops from southern Lebanon after 34 days of fighting between Israel and Hizbollah guerrillas. Most fighting stopped on Monday.

Some Hong Kong dealers reported active buying in the physical sector.

''Trading houses have bought palladium because it's quite cheap. Even today, we saw strong buying for gold from physical buyers as well as bargain hunters,'' said a dealer.

Platinum hit a low of $1,209 before rebounding to $1,214/1,219 an ounce. That was still lower than $1,230/1,235 late in New York.

Sister metal palladium also fell to $330/335 an ounce from $336/341. It touched a low of $327 an ounce in Asia.

Dealers said palladium attracted interest from jewellers and speculators as it was moving away from a four-year high of $406 an ounce hit in May.

Precious Metals Prices by 0426 GMT* Metal Last Net change Pct Move Gold 613.75 0.45 +0.07 Platinum 1214.00 -16.00 -1.30 Palladium 330.00 -6.00 -1.79 Silver 11.90 -0.03 -0.25 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 613.75 517.20 +18.67 Platinum 1214.00 968.00 +25.41 Palladium 330.00 254.00 +29.92 Silver 11.90 8.81 +35.07 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

REUTERS CS DS1130