Gold bounced on Thursday after losing around $2 in New York on a firm dollar and weaker oil prices, and dealers said it was likely to remain volatile in step with other commodities markets.

Spot gold was quoted at $612.60/613.60 per ounce at 1046 GMT, up from its New York close of $610.80/611.80, after trading in a range of $608.70-613.20.

The metal started 2007 around $640 and lost nearly $40 on dollar strength before bargain-hunters started picking it up.

"Physical and technical buying has again provided good support, with the recovery in the base metals improving gold's outlook," said James Moore, analyst at TheBullionDesk.com.

"However, the potent combination of oil weakness/dollar strength could still trigger long liquidation, pressuring gold back to the $585 region," he said.

Technical signals were mixed, chart-readers at Barclays Cpaital said, but there was more chance of a negative move than a positive one despite the recent corrective rally.

"Having failed to make headway above 614 the way is clear for another run at 600 and possibly an overshoot," it said in a note.

The dollar hit a 13-month high against the yen on Thursday, though it slipped from six-week highs against the euro as investors waited for clues from European Central Bank President Jean-Claude Trichet on whether interest rates could rise further in February.