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SINGAPORE, Oct 2 (Reuters) Gold rose more than $3 an ounce on Monday after crude oil extended gains, but dealers said the precious metal lacked incentives to breach key resistance levels.

Spot gold hit a high of $602.25 an ounce and was quoted at $601.40/602.40 an ounce by 0522 GMT, higher than $598.90/599.90 late in New York.

Gold dropped more than $4 an ounce in the U.S. market on technical selling after it failed to clear $607-$608 an ounce. The metal is down around 18 percent from its 26-year peak of $730 an ounce in mid-May.

Speculative buying from Japanese investors aided gold, but physical trading was generally quiet with Hong Kong closed for a holiday and China out of action for the week-long National Day holiday.

''If you look at the oil price, I don't think gold should go down further. I think we can break $607, even though the first attempt was met by profit taking,'' said a dealer in Singapore, referring to gold's rise to $606.50 last week.

''The physical sector is a kind of quiet but I do see some buying ahead this morning,'' he said.

U.S. crude futures rose above $63 a barrel after falling to a six-month low early last week, recouping a fraction of their two-month slump as two OPEC members cut output.

Gold would track the energy market in coming weeks but a dealer said the U.S. government would do its best to prevent oil from moving above $65 ahead of the Congressional election in November, thus limiting bullion's gains.

''The oil price tends to get better but the U.S. government is keen to control the oil price so that it would not exceed $65. As long as oil is moving in the range of $60 to $65, that is good for the U.S. economy,'' he said.

Voters will decide on Nov. 7 which party controls the U.S. House of Representatives, where President George W. Bush's Republicans now hold a 15-seat advantage over Democrats.

Democrats have turned public attention back to the unpopular war in Iraq and put the White House on the defensive in a heated debate over a National Intelligence Estimate that said the conflict had fueled Islamic extremism.

But Bush's slight rise in approval ratings in the last month, a big drop in gas prices and renewed voter attention to the fight against terrorism, usually a party strength, encouraged Republicans and improved their position in some tight races, analysts said.

Tokyo gold futures entered another volatile week, with the benchmark contract falling to as low as 2,300 yen ($19.46) per gram before rebounding to a near four-week high of 2,315 yen -- still well below a 20-year high of 2,587 yen hit in May.

''TOCOM price doesn't show any future direction. Big dealers are doing business without any direction,'' said Yukuji Sonoda, a precious metals analyst at Daiichi Commodities in Tokyo.

''Such price fluctuation is not good for private investors. It affects their investment attitude,'' he said.

Sonoda pegged the upside target for spot gold at $620 an ounce, a level last seen in August, but the metal was still at the mercy of crude oil price movements.

In the currency market, the dollar rose as high as 118.39 yen, the strongest since mid-April, before slipping back to 118.26 yen little changed from late New York levels.

The euro was also little changed at $1.2674 Silver edged up to $11.54/11.61 an ounce from $11.44/11.51 an ounce in New York.

Platinum rose to $1,150/1,155 an ounce from $1,138/1,143 an ounce. Palladium rose to $317/322 an ounce from $313/317 late in New York.

Precious Metals Prices by 0528 GMT* Metal Last Net change Pct Move Gold 601.90 4.10 +0.69 Platinum 1150.00 12.00 +1.05 Palladium 317.00 4.50 +1.44 Silver 11.54 0.14 +1.23 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 601.90 517.20 +16.38 Platinum 1150.00 968.00 +18.80 Palladium 317.00 254.00 +24.80 Silver 11.54 8.81 +30.99 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

($1=118.17 yen) REUTERS CS VV1435