(Refiles to add dropped words in paragraph 4)
NEW YORK, April 23 (Reuters) - U.S. gold futures finished slightly lower on Monday as a recovering dollar prompted investors to lock in profits after last week's rally, but rising oil kept prices from falling further
The platinum group metals also ended down after a report showed that speculative long positions were building up, and that indicated the precious metals were at risk of liquidation.
Most-active gold for June delivery GCM7 on the COMEX division of the New York Mercantile Exchange settled down $1.60 at $694.20 an ounce, traded from $690.50 to $697.70.
Bernard Hunter, director of precious metals marketing at ScotiaMocatta, said that selling after spot prices ran into resistance at around $690.50, combined with the relative strength of the dollar, sent bullion lower on Monday.
Hunter also cited quiet market conditions and support because of a strengthened oil.
U.S. crude futures ended up $1.78 to $65.89 a barrel on worries about supply disruptions after violence were reported in Nigeria.
The dollar inched up against the euro and a basket of other currencies. A higher dollar makes gold more expensive for investors holding other currencies.
Spot gold XAU= was quoted at $688.90/9.40 an ounce, below a late quote of $691.70/2.20 in New York on Friday. London's afternoon gold fix was $688.70.
As of April 17, net long positions in gold among noncommercial investors, or speculators, rose 20 percent compared with its previous period, the Commodity Futures Trading Commission (CFTC) said in its weekly Commitment of Traders report. [ID:nN20428468]
Some analysts said that investors should use caution because a build-up in speculators could mean that the precious metals market was at risk of long liquidation.
Hunter, however, contended that the latest CFTC report only confirmed the ongoing interest from funds, and that short positions were still modest and not significant.
Turnover in the Chicago Board of Trade's electronically traded 100-oz gold contract was 26,459 lots as of 3:11 p.m. EDT (1911 GMT). (www.cbot.com/cbot/pub/page/)
Palladium and platinum also closed down after solid gains last week on proposals for physically backed exchange-traded funds.
UBS Investment Bank said in a research note that futures positioning was approaching risky levels for precious metals, especially for palladium, referring to Friday's CFTC's Commitment of Traders report.
"But we believe further short-term gains in metals can occur, especially in platinum and palladium due to the impending launch of the platinum and palladium ETFs, this week in London and then next month in Zurich," UBS said.
London-based ETF Securities said on Thursday it would launch physically backed ETFs based on platinum, palladium, gold and silver on the London Stock Exchange. [ID:nSYD284831]
This followed Zurich Cantonal Bank's announcement that it planned to launch ETFs in platinum, palladium and silver by May 10.
Platinum fell after hitting a one-year high last week. July platinum PLN7 ended down $9.50 at $1,331.70 an ounce. Spot platinum XPT= was quoted at $1,315.00/20.00.
June palladium PAM7 eased 85 cents to finish at $387.40 an ounce. Spot palladium XPD= fetched $380.00/385.00.
COMEX May silver SIK7 reversed early losses to close up 9.50 cents at $14.050 an ounce, traded from $13.860 to $14.110.
Spot silver XAG= was quoted at $13.90/3.95, compared with $13.92/3.96 late Friday. Silver was fixed at $13.860 in London.