Gold firmed in early trade after Friday's dollar-related losses as the currency softened a touch against the euro and as oil prices rallied to record highs, boosting the metal's appeal as an inflation hedge.

The precious metal tends to move in an inverse relationship with the U.S. currency. A weaker greenback makes dollar-priced gold cheaper for holders of other currencies, and increases the metal's attractiveness as an alternative investment.

Friday's price drop has been seen as a buying opportunity for investors, analysts said.

'Dip buying in Asia and record oil prices are helping to support gold prices despite a strengthening in the dollar last Friday,' noted Fairfax analyst John Mayer.

At 10:07 a.m., spot gold was trading at $918.53 an ounce against $912.30 in late New York trade on Friday.

Its gains were in line with those of other commodities, as oil touched a new all-time high of $117.40 in New York and the base metals trended higher.

Gold slid by more than 3 percent on Friday afternoon, after the dollar bounced on a well-received earnings report from Citigroup Inc (NYSE:C) which boosted hopes that the worst of the credit crisis is over.

The precious metal has benefited from the turmoil in the financial markets over the last six months, as it is seen as a safe store of value at a time of volatility in other asset prices.

Although gold is seen as vulnerable in the short to medium term to further upward moves in the U.S. dollar, it remains well supported by the same host of factors that caused it to rally to record highs above $1,000 an ounce in March this year.

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