LONDON, June 16 - Gold surged 3.3 percent on Friday on dollar weakness and firm oil prices, but pared gains in the afternoon trade as some investors sold their positions ahead of the weekend.

Gold remained under threat and may slip, as people were not yet convinced the recent downtrend is over, analysts said.

"The majority of trading has been done this week. I think we will have a quiet close to the week," said a precious metals trader in London.

"We were nervously bullish this morning. Since then it has come down but we are still up," he added.

Gold (XAU=) rose as high as $585.00 an ounce before easing to $574.30/575.00 by 1352 GMT, against $566.50/$567.50 in late New York on Thursday, when it jumped as much as three percent.

Gold rebounded as a recovery in global share prices lifted confidence of investors, who earlier in the week exited commodities to avoid risks.

European shares reversed their gains after China's central bank said it would raise its reserve requirements and the U.S. current account deficit narrowed more than expected.

But traders said there was no impact of China news on precious metal prices.

"Overall, I see precious metals to remain vulnerable in the short-term. however, I don't expect it to test new lows since physical demand and bargain-hunting should provide some support," said another European dealer.

Gold came under some pressure in late trade as the dollar, after falling earlier, steadied. Oil eased after some gains.

Gold is often viewed as an alternative investment to dollar and a hedge against inflation.

"It's (gold) vulnerable to any deterioration in sentiment towards global asset markets. The world does look a calmer and happier place, but that could change very quickly," John Reade, analyst at UBS Investment Bank, said.

In other precious metals, silver (XAG=) advanced as high as $10.35 an ounce before falling to $10.05/$10.15, compared with $10.00/10.10 late in New York.

Platinum (XPT=) fell to $1,157/1,163 an ounce from $1,160/1,170, while palladium (XPD=) rose to $301/309, compared with $295/$300 in the U.S. market.