Gold creeps higher on investor buying, dollar

By Lewa Pardomuan

SINGAPORE (Reuters) - Gold rose further Monday after an early dip in the U.S. dollar and as recent weakness in bullion prices spurred demand from some investors, but weaker oil prices could cap the upside.

Gold rose to $871.80/872.80 an ounce from $869.00/870.00 an ounce late in New York on Friday, when it gained more than $1 an ounce as buyers covered short positions before the weekend.

Gold tumbled to its lowest level in almost six weeks around $856 last week on a firmer dollar which reduced its appeal as an alternative investment. The metal is well below a lifetime high of $1,030.80 hit in mid-March.

"Perhaps investors are slowly accumulating gold at the now cheaper prices. I think gold very much depends on the dollar now as it seemed to have gained quite a bit in the last week," said Adrian Koh, analyst at Philip Futures in Singapore.

"Gold's range is around $854 to $885 but technically, the dollar looks like it could move higher, which means that gold could be further weighed," he said.

The dollar was steady near a four-month high against the yen, having earlier fallen on disappointment that Group of Eight countries had failed to address the weakness of the U.S. currency at a weekend meeting.

But an increase in gold holdings on the exchange-traded fund

suggested investors were shifting their money back to bullion after the recent falls in prices, said dealers.