LONDON (Commodity Online) : Gold prices advanced again Monday as the dollar pared early gains against major currencies and oil hit a new one year high.

The precious yellow metal was seen trading at $1050.85 an ounce at 3.00 p.m Indian time while U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $4.20 to $1,055.70 an ounce.



Analysts said gold is on the way to set new record highs above the peak of $1,070.40 an ounce it set last week if the dollar continues to weaken against the euro, boosting interest in the metal as an alternative asset.

The euro rose back towards 14-month highs against the dollar on Monday, while the dollar index, which tracks the U.S. unit's performance against a basket of six other currencies, gave up early gains to decline 0.14 percent.

Dollar weakness, which makes gold cheaper for non-U.S. investors, was identified by analysts as the primary driver behind gold's rally to record highs last week.

Oil prices rose above $79 a barrel on Monday, marking their eighth straight session of gains. U.S. earnings could be a key driver of oil prices this week, as investors try to gauge the strength of the global economic recovery.

Physical demand for the metal was lacklustre on Monday, with holdings of the largest gold exchange-traded fund, the SPDR Gold Trust, flat for a seventh session on Friday.

Gold buying in India, the world's biggest bullion consumer last year, slowed to a trickle as the festival season came to an end.

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