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SINGAPORE, Sep 7 (Reuters) Gold struggled to sustain early gains on Thursday as dealers turned cautious after a firming dollar abruptly ended the metal's rally to above $640 the previous day.

Silver hovered below its highest level in three months while palladium fell more than 2 percent, tracking a decline in sister metal platinum.

Spot gold opened at $633.00 an ounce in Asia, hit a high of $635.50 and was at $633.70/634.70 an ounce by 0443 GMT.

Gold was last quoted at $633.60/634.60 in New York on Wednesday, when it had risen to a four-week high of $640.25 on short-covering before profit resurfaced as the dollar extended its gains.

''We can say there's disappointed selling in the market (because) it can't break through $640. If we break below $630, I think we can see some selling off to $625 or $620,'' said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

Dealers noted limited purchases from jewellery makers in China despite the approaching National Day holiday and the Moon Cake Festival in October.

Premiums for gold bars were unchanged at zero the spot London price in Hong Kong ''They would have already bought gold in August when the market was trying to come down to $610. There was extra physical buying,'' said Leung, adding that the current higher price turned off physical buyers.

Benchmark gold futures on the Tokyo Commodity Exchange, currently August 2007, fell 10 yen per gram to 2,407 yen ($20.63) to track losses in New York's COMEX market.

For direction, dealers would turn to currencies as well as a meeting of senior diplomats from the six world powers in Berlin to discuss what to do with Iran after it ignored a U.N. Security Council deadline to freeze its nuclear enrichment programme.

The stand-off between Iran and the West over Tehran's nuclear ambition was among the factors which helped gold rise to a 26-year high of $730 an ounce in mid-May.

Tehran rejects Western accusations that it is trying to develop the capability to produce atomic weapons and insists it only wants nuclear fuel to peacefully generate electricity.

Some dealers expected gold to trade in range of $628 to $640 later in the day.

''There's probably some support around $615 and if we break that level, I think there's a bit of trouble. It looked promising yesterday. Had we spent another day above $640, gold would go back to the $660 level,'' said a dealer in Sydney.

The dollar held steady after getting a boost on Wednesday from a surprisingly big jump in U.S. labour costs that suggested the Federal Reserve may have to raise interest rates further.

The dollar edged up to 116.75 yen from 116.65 yen late in New York.

The euro rose to $1.2825 from $1.2805 late in New York but the single currency was still stuck in a range between $1.2690 and $1.2940 for the past five weeks.

Silver rose to as high as $13.04 an ounce and was quoted at $13.00/13.07 by 0445 GMT, down slightly from $13.02/13.09 late in New York.

The metal had risen to a three-month high of $13.22 an ounce on Tuesday on fund buying.

Platinum fell to $1,255/1,260 an ounce from $1,263/1,268 an ounce, well below a three-mongh high of $1,270 an ounce hit on Wednesday.

Palladium also fell to $346/351 an ounce from $355/360 late in New York.

Precious Metals Prices by 0449 GMT* Metal Last Net change Pct Move Gold 634.10 0.90 +0.14 Platinum 1255.00 -8.00 -0.63 Palladium 346.00 -9.00 -2.54 Silver 13.00 -0.02 -0.15 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 634.10 517.20 +22.60 Platinum 1255.00 968.00 +29.65 Palladium 346.00 254.00 +36.22 Silver 13.00 8.81 +47.56 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

($1=116.68 yen) REUTERS PKS GC1054