LONDON (Thomson Financial) - Gold moved into the black in midafternoon trade as the dollar pared gains against the euro after this morning's rally, boosting the precious metal's appeal as an alternative investment.

A surge in oil prices ahead of the weekend amid supply fears from the North Sea and Nigeria is also pushing prices higher. Gold is often bought as a hedge against oil-led inflation.

At 3.43 p.m., spot gold was trading at $891.90 per ounce against $886.70 in late New York trade on Thursday.

(Article continues below)

U.S. consumer confidence data released this afternoon came in 'worse than expected, which has put the Dow under pressure and has weakened the dollar slightly', said TheBullionDesk.com analyst William Adams.

However, prices remain below $890 an ounce. Earlier on Friday, gold sank to an intraday low of $877.65, its lowest price since April 10, and the metal is trading some 14 percent below the all-time high it reached on March 17.

Gold's failure to keep rising earlier this week as the dollar hit a new record low against the euro and oil reached an all-time high has led some to speculate that the precious metal's run higher has topped out.

The precious metal hit its lowest value in over two weeks this morning as a firmer U.S. dollar and falling expectations for more further rate cuts weakened the appeal of commodities priced in the greenback.

Investors are concerned higher prices are affecting gold consumption among jewellers, while there are signs increased risk appetite may be hitting investment demand for the commodity, analysts said.

The volume of the metal held by the world's largest gold exchange-traded fund, StreetTRACKS Gold, has fallen by 7.9 pct in the past seven days to 591 tons yesterday.

CLICK HERE FOR FULL STORY