SYDNEY (Reuters) - Gold recouped some of last week's late losses on Monday as the dollar weakened and oil rose, nudging bullion up 1 percent before recoiling.
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 Investec Australia analyst Darren Heathcote.
Spot gold was fetching $845.70 an ounce at 0739 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 93 cents to $43.30 a barrel on Monday.
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 0.86 percent to $844.60 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 11 yen higher at 2,438 yen. The previous key contract for October was up 9 yen to 2,437 yen, Reuters data showed.
Spot platinum was $7 at $853.50 an ounce.
Spot palladium was steady at $175.50 an ounce, while silver climbed to $10.99 an ounce from $10.82.
