SINGAPORE, Jan 2 Gold rose to its highest level in nearly a month on Tuesday as the dolla

SINGAPORE, Jan 2 (Reuters) Gold rose to its highest level in nearly a month on Tuesday as the dollar weakened currencies but trading was limited with key centre Japan on holiday.

Spot gold hit $637.30, its highest since Dec. 8, up from $636.10/637.10 an ounce late in New York on Friday.

Other precious metals tracked gold, which rose 23 percent in price last year. Dealers were keeping an eye on the currency market ahead of the release on Wednesday of minutes from the Federal Reserve's December policy meeting.

''Recent talk suggests that inflation might be under control again in the U.S....Consequently, that's going to help support gold in an immediate future,'' said Darren Heathcote of Investec Australia in Sydney.

''As for today's play, it's been very subdued. I would expect it might remain in a tight range throughout most of the day. It would probably stay somewhere in $636 to $638.50,'' he said.

Benchmark gold futures on the Tokyo Commodity Exchange, currently December 2007, ended 20 yen per gram higher at 2,445 yen on Friday.

Japanese financial markets are closed through Wednesday for New Year's holidays.

The euro hit a two-week peak against the dollar and held near record highs against the yen, buoyed in part by expectations for further rises in euro-zone interest rates.

The euro rose to $1.3237 from $1.3196 late in New York on Friday, while the dollar eased to 118.73 yen from 119.01 late in New York.

The physical sector lacked activity because of a holiday in Singapore, a centre for bullion trading in Southeast Asia.

A holiday mood persisted other parts of Asia but dealers said gold's strong performance at the start of the new year could encourage more investors to buy the precious metal.

Gold spiked to a 26-year high at $730 on May 12, 2006 as fund managers poured money into the metal on worries about rising energy costs, tension in the Middle East and uncertainty over the dollar's outlook.

''There's nothing for me to say. We can only say resistance lies ahead at $640. If we break above that, we'll see it testing $650,'' said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

''We don't see much physical buying. It's still in a holiday mood,'' said Leung, who pegged support around $610 an ounce.

Silver hit a two-week high at $12.95 an ounce, up from $12.85/12.92 late in New York. Platinum was steady at $1,132/1,137 an ounce.

Palladium matched Friday's four-week high at $332 an ounce. The metal was last quoted at $332/336 late in New York on Friday.

REUTERS DKS RN1128