SYDNEY (Reuters) - Gold recouped some of last week's late losses early on Monday as the dollar weakened and oil rose, nudging bullion up 1 percent.
However, half the gains were erased in the first few hours of trading by profit takers betting gold's upside may be limited.
"A bit of the weak dollar, higher oil and then some profit taking are behind gold's movements today," said Investiec Australia analyst Darren Heathcote.
Spot gold was fetching $842.05 an ounce at 0412 GMT, recoiling from a peak of $847.45 but still above Friday's New York nominal close of $837.60.
The U.S. dollar fell against the euro, giving up some of its gains made after the U.S. government offered a lifeline to U.S. carmakers, as investors remained concerned over the deepening economic recession.
Gold dropped nearly 3 percent on Friday as the dollar charged higher against the euro.
More gloomy news on the global economy expected this week -- starting with revised U.S. third quarter GDP on Tuesday and November U.S. personal spending on Wednesday -- pointing to a long recession ahead could also bolster bullion buying.
"That's as long as the stock markets don't crash," said Heathcote.
Gold was also finding an ally in rising oil prices, which could spell easing deflationary concerns, according to dealers.
NYMEX crude for February delivery rose 41 cents to $42.77 a barrel after touching $43.08 a barrel at the start of Globex electronic trading.
Bullion rallied to a two-month high of $881.20 last week, boosted by the gains in the euro. Gold tends to move in the opposite direction to the dollar as a strong U.S. currency makes gold more expensive for local currency holders.
COMEX gold futures for February delivery were up 0.76 percent to $843.80 per ounce in after-hours trade, also retracing from earlier highs in step with spot metal.
The benchmark December gold contract on the Tokyo Commodity Exchange was 15 yen higher at 2,442 yen. The previous key contract for - October -- was up 14 yen, also to 2,442 yen, Reuters data shows.
Spot platinum down 50 cents to $846.00 an ounce.
Spot palladium was steady at $175.50 an ounce, while silver climbed to $11.00 an ounce from $10.82.
