Gold prices climbed higher in early London trade as the dollar remained under pressure following weak U.S. payrolls data on Friday, reports Thomson Financial.

Friday’s grim jobs news has put further downward pressure on the already weak dollar, by reinforcing the widely-held view that the US economy is in a downturn.

At 9:27 am., spot gold was trading at $914.78 an ounce against $909.80 in late New York trades on Friday, according to Thomson.

High oil prices — edging up to $108 a barrel this morning — also provided support for the yellow metal, as investors buy to hedge against rising inflation.

Is the bull run on gold toast?

“Not if inflation in the US stays stubbornly high,” says Charles Delvalle.

“The government is projecting a budget deficit over $400 billion for 2008. There are also a slew of bailouts going on to try and save the world’s financial system. This involves more money (aka, more debt). Finally, no presidential candidate has offered any real solutions to cutting this deficit, only new spending initiatives and tax cuts.”

Meanwhile, Matt Badiali has a warning for investors in gold stocks.

“Gold investors have to remember that just because a mining company is producing gold, it doesn’t necessarily mean it will make money.

“These companies are exposed to the same high prices that we face at the pump… and the grocery store. While costs remain sky-high, gold investors can consider skipping right to bullion or the Gold ETF (GLD) as opposed to buying big mining stocks.”