Gold dipped but held firm above $800 an ounce on Monday because of surging oil and prices and a weak U.S. dollar and dealers said strong fundamentals could help the metal retest a record high of $850 soon.

Spot gold edged down to $803.10/803.90 an ounce from $807.70/808.50 in late New York. Gold hit an intraday high of $807.60 on Monday, just below Friday's 28-year high of $807.70 ounce.

I am sure gold will reach $850 by the end of this year, said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.

Fatal mining accidents in South Africa, the world's main gold producer, ignited supply concerns and were supportive for prices while a falling dollar could encourage countries like China to sell the U.S. currency and buy commodities, said Sonoda.

Gold has risen more than 20 percent this year as record-high oil prices elevate its role as a hedge against inflation and a struggling dollar lifts its appeal as an alternative investment.

Every government is very anxious about the dollar price. This will automatically support the gold price. There's a strong intention from the Chinese government to sell dollar, he said.

China holds 600 tonnes of gold in its reserves, according to the World Gold Council.

AngloGold Ashanti Ltd shut one of its larger mines in South Africa on Friday after a miner was killed in a rock-fall and as a miners' strike to protest against a spate of mine deaths in the country loomed.

The spate of deaths in South Africa's mines that are some of the world's deepest has pitted the 300,000-strong National Union of Mineworkers against mining firms, as more than 150 workers have been killed this year following 200 deaths in 2006.

Gold hit an all-time high of $850 in January 1980, when investors bought the metal heavily in the face of high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution.

After adjusting for inflation, that level was equal to $2,079 an ounce at 2006 prices, according to metals consultancy GFMS Ltd.

U.S. crude for December delivery fell $1.12 to $94.81 a barrel on Monday, pulling back from previous session's 2.5 percent surge, as easing tensions in the Middle East encouraged investors to take profits.

Japanese gold futures reached a 23-year high, rising in line with bullish cash gold. The benchmark October 2008 contract on the Tokyo Commodity Exchange ahit a high of 2,997 yen a gram before ending the morning session up 51 yen at 2,988 yen.

If there's more money flowing into gold, maybe we can even see gold at $900 by the end of this year, said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

Everything seems to be good for gold, he said.

The euro dipped to $1.4500, still near an all-time high of $1.4528 hit on Friday on trading platform EBS, the highest since its launch in 1999.The yen firmed at 114.40 yen.

COMEX gold futures edged down in Asia with the most active December contract was trading at $807.5, down $1.0.

On Friday, gold futures in New York surged above $810 on inflation fears sparked by a combination of surging crude oil prices and a record low dollar following a surprisingly strong U.S. jobs report.

Platinum inched down to $1,453/1,458 an ounce from $1,454/1,459 in New York on Friday,. Palladium edged down to $372/376 an ounce from $373/377 in New York.