LONDON, June 11: Gold rose in Europe on Monday as physical buying lifted prices off last week's three-month low, but the market remained vulnerable to further selling, traders said.

A firmer dollar and a general sell-off across asset markets prompted investors to trim positions last week, notably in riskier areas such as gold.

By 1031 GMT spot gold was at $651.95/652.45 a troy ounce, up from New York's late quote on Friday of $648.20/649.70 and around one per cent higher than the low point of $644.40.

There's been a reasonable amount of physical demand, said Simon Weeks, director precious metals at ScotiaMocatta.

But he, with other traders, said the market remained vulnerable to further selling and would need to move back over the $654/55 level to get out of the danger zone in the short term.

Credit and debt market developments are moving against gold...If equities rally, as we think they will, this too will be negative for gold, Canadian economist Martin Murenbeeld said in a weekly gold comment.

The dollar needs to reverse course and decline again...or it could be a long and uncomfortable summer for gold investors. The euro held near Friday's two-month low against the US currency, trading at $1.3347/48, while Britain's FTSE index gained 0.7 per cent.

It lost 2.4 per cent last week when the possibility of further monetary tightening drove benchmark US bond yields above 5.25 per cent..

Weeks also noted that holdings in the New York gold exchange traded fund fell by seven tons on Friday to 469.91 tons. This ETF accounts for 80 per cent of the holdings in the various ETFs listed on exchanges around the world.

Traders said a failure to hold above $650 would open up gold to even deeper losses down towards the 200-day moving average of $638.25 -- last visited in mid-March.

In industry-related news, the biggest mine workers union in top gold producer South Africa said most of its members would probably not be able to join a sympathy strike planned for Wednesday in support of striking civil servants. Other metals were steady.

Spot platinum rose to $1,289/$1,293 from New York's $1,281/$1,285, while palladium was at $366/$369 an ounce versus $365.40/$369.50.—Reuters