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LONDON, Sep 29 (Reuters) Gold prices slipped on Friday to hover below $600 an ounce, with selling driven by a dollar rise and oil price weakness.

The metal, which had jumped about five percent in a week, lacked the strength to crack key price levels in the near term, but was poised to gain strongly in the medium term, analysts said.

''Month- and quarter-end book-squaring is expected to be seen across the day. However, with oil prices stalling and the dollar edging high, gold is at risk of dipping back into the $573-$597 trading area,'' said James Moore, analyst at TheBullionDesk.com.

Gold hit a high of $603.50 before falling to $598.85/599.35 by 1416 GMT, against New York's $603.00/604.00 late on Thursday.

Oil shed this week's gains and fell back towards $62 after OPEC member Nigeria appeared to be alone in its decision to trim output to stem a two-month price slide.

''Unless the oil price keeps going upward, there's not much else to push gold up. We've pushed above $600 but then it falls away very quickly. This is suggesting that things don't look too good,'' said a dealer in Sydney.

The metal regained $600 for the first time in more than two weeks on Thursday and rallied to $606.50 after a recovery by oil prices sparked investment buying.

''Obviously the bounce in oil prices helped gold...(but) I am not calling for a sharp increase from these levels in the very short term,'' John Reade, precious metals analyst at UBS Investment Bank, said.

''I still remain constructive to gold. We have got our three-month forecast at $640 an ounce and I am pretty confident that we will get that number,'' he added.

The dollar extended gains against the euro and the yen after an inflation gauge the U.S. Federal Reserve watches closely emergbed in line with expectations.

But the outlook for the dollar remained cloudy.

''Concerns about the long-term purchasing power of the U.S.

dollar are expected to drive renewed investment demand for precious metals once the Federal Reserve feels confident enough about inflation risks to pause in the interest tightening cycle,'' Deutsche Bank said in report.

In related news, Sweden's central bank said it would sell up to 10 tonnes of gold over the next year and reinvest the proceeds in foreign securities.[ID:nL29825654] In other precious metals, silver fell to $11.43/11.50 an ounce from $11.56/11.63 in New York.

Platinum fell to $1,139/1,144 an ounce from $1,150/1,155 an ounce, while palladium was down at $312/316, versus $319/324 an ounce.

REUTERS PKS KP2030