Gold futures gained on Friday to close at their highest level since late April and sealed a weekly gain after crude oil surged to a record price above $126 a barrel and weakness in the U.S. dollar.

Gold for June delivery rose by $3.70 to close at $885.80 an ounce on the Comex division on the New York Mercantile Exchange. The contract closed 3.2 percent, or $27.80, above last Friday's closing level of $858.

Gold is already some 15 percent lower than the record $1,032.50 it hit mid March, largely as expectations for the U.S. economy and the dollar appear to have bottomed out.

Crude-oil futures climbed as high as $126.25 a barrel Friday with strong demand for diesel fuel and concerns about global crude supplies sending prices to a fresh all-time high.

The dollar index, which measures the greenback against a basket of six major currencies, fell 0.5 percent to 73.08.

Dollar weakness typically benefits dollar-denominated commodities, such as gold and crude oil, as it makes them cheaper for holders of other currencies.

The bullion price drew closer to $890 as this year's fairly lackluster Indian festival demand came to a close, but saw support from the apparently unending surge in oil, said Jon Nadler, senior analyst at Kitco Bullion Dealers.

Demand for commodities as inflation hedges resurfaced this week, after oil's largest weekly gain in more than a year, Nadler said in emailed comments. Black gold has now doubled in value and poses serious threats to the global economy.

Also on the Nymex, July silver edged up 4 cents to close at $16.91 an ounce and June palladium rose $7.95 to end at $443.85 an ounce. July copper futures fell 7 cents to close at $3.72 a pound. July platinum futures soared $59.50 to close at $2,101.80 an ounce.