Gold gained more than 1 percent on Tuesday as record high oil prices and a weaker dollar encouraged investors to put money into precious metals.

The metal <XAU=>, seen as a hedge against oil-led inflation and an alternative investment to the U.S. currency, climbed to a high of $935.65 an ounce and was quoted at $932.90/933.90 at 1001 GMT, against $925.30/926.10 late in New York on Monday.

"Gold has gained on the back of a weaker dollar. We are now seeing some acceleration in the buying interest on expectations that gold could shift higher from here," said Frederic Panizzutti, metals analyst at MKS Finance.

"We expect the next target to be around $950. Still, it might take a bit of time to reach that level. The market remains shy after the recent price correction," he added.

Gold slipped to a two-month low of $872.90 an ounce in early April after hitting a record high of $1,030.80 on March 17 in a broad commodities sell-off, triggered by a rise in the dollar and some weakness in oil prices.

Oil advanced to all-time peaks on Tuesday, as investors sought to hedge against a battered dollar. It is up 17 percent from the start of the year and is averaging near $100 a barrel.

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