LONDON - Gold rose more than one percent on Monday as a softer dollar and renewed inflationary concerns fueled by firm oil prices spurred buying interest, traders said.

Other precious metals also advanced, with platinum gaining 1.4 percent and silver jumping about two percent before paring some gains in late European trade.

"Gold is pretty hesitant and driven really by the dollar weakness," said Stephen Briggs, economist at SG Corporate and Investment Banking in London.

"At the moment that works, but if the dollar were to turn around again -- which it is known to do -- then this recovery would probably seize in the current environment," he added.

Spot gold rose as high as $645.00 an ounce and was quoted at $641.05/642.05 by 1322 GMT, versus $637.30/638.10 in New York late on Friday.

Analysts said gold's fall by more than $100 in a short span of time had dampened the confidence about the bull trend and it would take some time before the sentiment returned.

Gold had fallen out of favor in recent weeks after hitting a 26-year high of $730 on May 12 as funds and speculators sold out for profits on hopes the U.S. dollar would strengthen.

The metal fell as low as $618.50 last week, down 15 percent from its recent highs, and some traders said the market was expected to continue trading in a broad range before rising.

"Precious metals have recovered some lost ground over the past 24 hours of trading ... But we are not inclined to turn tactically bullish on the precious metals at this stage," analyst John Reade of UBS Investment Bank said.

"We suspect that the metals will settle into a range through what could be a long choppy summer," he said in a daily note.

The dollar hit a year low against the euro after surprisingly soft U.S. employment data last Friday dampened expectations the U.S. Federal Reserve will raise interest rates again this month.

A drop in the U.S. currency makes gold, seen by some as insurance against inflation, cheaper for holders of other currencies and lifts demand.

"Gold needs to break above $672 to end its current consolidation phase and confirm a resumption of its bullish run higher," said James Moore, analyst at TheBullionDesk.com.

Oil rose more than $1 to above $73 a barrel after major exporter Iran warned that flows from the Gulf, which pumps nearly a quarter of the world's crude, would be endangered if Washington made a "wrong move" over Iran.

The remarks from Supreme Leader Ayatollah Ali Khamenei raised fears the world's fourth biggest oil exporter might halt crude shipments over its nuclear standoff with the West.

In industry news, Newcrest Mining Ltd. (NCM.AX: Quote) said the rate of production at its redeveloped Telfer mine had been affected by varying ore types and grades, leaving the company unable to give a firm estimate of full-year production.

The company previously put annual output at 700,000 ounces.

In other metals, silver was at $12.17/12.27 an ounce after rising to $12.35, versus $12.11/12.21 in the U.S. market.

Platinum rose to $1,256 an ounce before easing to $1,255/$1,261, versus $1,239/1,247, while palladium was at $357/363 an ounce, compared with $346/352 in New Yor