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TOKYO, July 3 (Reuters) Gold was steady on Tuesday after rising more than 1 percent the previous day on a weaker dollar and security concerns, while Tokyo futures rose to its highest in a week though a firmer yen curbed gains.

Trading was likely to be subdued ahead of the Independence Day holiday on Wednesday, when U.S. financial markets will be closed, players said.

Spot gold stood at $655.90/657.40 an ounce as of 0202 GMT, versus $656.70/$658.20 in late New York.

A possible al Qaeda plot to detonate car bombs in London and Scotland spurred flight-to-safety buying of gold on Monday, which, coupled with a lower dollar, has helped lift bullion.

An eighth suspect in connection with the plot was detained in the Australian city of Brisbane, officials said on Tuesday.

However, traders said $665 was proving to be a strong resistance level.

''There is strong resistance at $665, and investors are very sensitive to that ... which makes people wary of buying actively,'' Tatsuo Kageyama, an analyst at Kanetsu Asset Management Co. Ltd. said.

Most of the recent rise comes from short-covering, rather than fresh buying.

If gold is unable to rise above $665 after the Independence Day holiday on Wednesday, we may see liquidation emerge, he said.

On the Tokyo Commodity Exchange, the most active gold futures contract for June 2008 delivery closed the morning at 2,610 yen a gram, up 13 yen or 0.5 percent from Monday's close.

It rose to a peak of 2,616 yen, the highest since it reached 2,617 yen on Tuesday last week.

The session's trough was 2,609 yen.

In the currency market, the dollar matched a 26-year low versus the sterling and stayed near a record low against the euro as investors flocked to currencies whose rates are expected to continue climbing, while U.S. rates were likely to remain steady.

Dollar-denominated gold prices tend to rise when the U.S.

currency falls because it gains value in overseas markets.

The recent attacks in London and Scotland also spurred selling of the dollar ahead of the U.S. national holiday, on concerns that the United States may also be a target.

The dollar was at 122.20/122.25 yen against 122.37/122.40 in late U.S. trade.

Strong crude oil prices also provided support for gold, as the precious metal is often bought as a hedge to inflation.

U.S. crude futures hovered around $71 a barrel, drawing strength from concerns over supply tightness.

On Monday, most-active gold for August delivery on the New York Mercantile Exchange settled up $8.30, or 1.3 percent, at $659.20 an ounce.

Cash platinum rose to $1,281/$1,286 an ounce, up from $1,278/1,282 in late New York.

Spot silver fell to $12.59/$12.64 an ounce from $12.63/12.68 in New York.

Spot palladium was mostly steady at $366/$371.

Precious metals prices at 0340 GMT Last Net Change Pct Move Turnover (lots) TOCOM Gold 2612.00 15.00 +0.58 34461 TOCOM Platinum 5011.00 31.00 +0.62 19812 TOCOM Silver 499.90 4.20 +0.85 1788 TOCOM Palladium 1473.00 3.00 +0.20 333 Spot Gold 656.00 Spot Platinum 1282.00 Spot Silver 12.60 Spot Palladium 366.00 Change so far in 2007 Metal Latest bid End prev year Pct Move TOCOM Gold 2612.00 2445.00 +6.83 TOCOM Platinum 5011.00 4254.00 +17.80 TOCOM Silver 499.90 493.30 +1.34 TOCOM Palladium 1473.00 1255.00 +17.37 Spot Gold 656.00 636.10 +3.13 Spot Platinum 1282.00 1132.00 +13.25 Spot Silver 12.60 12.85 -1.95 Spot Palladium 366.00 332.00 +10.24 Euro/Dollar $1.3622 Dollar/Yen 122.31 TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams and spot prices in $ per ounce.

REUTERS GL KP1012