Gold drops but holds near 1-month high, investors sell

By Lewa Pardomuan

LONDON (Reuters) - Gold dropped on Thursday as investors booked profits after pushing up the price to its highest level in more than a month above $930, but more gains may be in store with oil hitting another record.

Spot gold fell to $926.00/927.00 an ounce from late New York levels of $928.55/929.75, having earlier jumped to $935.30 an ounce -- its highest level since April 18.

Oil CLc1 roared to an all time high above $135 an ounce on supply worries and the weakening U.S. dollar, triggering fears of inflation and elevating gold's safe-haven appeal.

"I think the confidence is back in the market. We broke $900. We broke $930," said Frederic Panizzutti, metals analyst at MKS Finance.

"So definitely we see some potential for higher levels again. The psychological (resistance) is $950, then probably $980 and there is of course the psychological $1,000 level."

Despite the gains, gold was still more than $100 away from record high of $1,130.80 an ounce hit on March 17 and some analysts remained cautious.

"There are enough supply constraints and there is no dearth of bullish outlook on crude oil from various institutions and organizations. These one-way outlook adds fuel to the fire, propelling gold along with it," said Pradeep Unni, analyst at Vision Commodities in Dubai.

"Possibly, we could see $138-$141 in crude in near term, but extreme caution should be exercised as the rally seems to have over-extended itself and sharp reversals could be on board, meaning could also succumb in the process."