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.

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"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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