SINGAPORE, Jan 11 Gold struggled to regain its footing on Thursday after losing around $

SINGAPORE, Jan 11 (Reuters) Gold struggled to regain its footing on Thursday after losing around $2 in New York on a firm dollar and weaker oil prices, and dealers said volatility turned off bargain hunters.

Spot gold hit a high of $611.30 an ounce but then dropped to as low as $608.70 an ounce. It was quoted at $609.55/610.05 an ounce by 0359 GMT, down from $610.80/611.80 late in New York on Wednesday.

Gold hit a high of $615.70 an ounce this week but failed to sustain the gains. The metal started the new year on a high note, hitting its highest in nearly a month at $644.90 last week but the recent sell-off disappointed investors.

''If there was any bargain hunting, it would have gone up a bit higher. I am a bit scared because we haven't made any headway to the upside,'' said a dealer in Singapore.

''The downside cycle is at play again. That's why I am a bit more negative right now. Maybe bargain hunting has dried up and there are some bears who will try to push down the price if they want to,'' said the dealer who pegged support around $600.

Japanese gold futures were also volatile, with benchmark gold futures on the Tokyo Commodity Exchange, currently December 2007, falling 2 yen per gram to 2,370 yen ($19.83) after trading as high as 2,375 yen.

''The volatility that we've seen in the first part of this year is unlikely to settle down until more traders are basically back to their desks right away across the globe,'' said Craig James, chief economist at Commonwealth Securities in Sydney.

''If we are adopting ranges now for gold, we'd have to specify quite a large range ... probably something in the order of between $600 and $630 an ounce, I think over the next month.

''If it gets through $600, then $575 comes in focus very, very quickly,'' he said.

The dollar was within sight of a six-week high against the euro, with investors waiting for clues from European Central Bank President Jean-Claude Trichet later on Thursday on when interest rates could next rise.

The euro was steady at $1.2945 after falling as low as $1.2931 on Wednesday -- its weakest since Nov. 23.

The dollar rallied for a fifth session of the past six against an index of major currencies on Wednesday after data showing the country's trade deficit unexpectedly shrank to $58.2 billion in November, the smallest since July 2005.

''To some extent, the volatility that we're seeing in the commodity markets is going to also reduce some of the allure from precious metals. Investors may want to stay away until they have a clearer picture,'' said James of Commonwealth Securities.

Oil prices deepened losses to slump by more than $1 a barrel on Thursday, falling below $53 for the first time since June 2005 as Asian sellers extended a new year slump that deepened after news of rising U.S. fuel stocks.

In other precious metals, silver dipped to $12.30/12.37 an ounce from $12.32/12.39 an ounce.

Platinum fell to $1,127/1,132 an ounce from $1,146/1,150.

Palladium was unchanged at $327/332. ($1=119.52 yen) REUTERS CS RS1144