Gold prices fell the most in three weeks as lower energy costs eroded the precious metal's appeal as a hedge against inflation.

Gold has gained 21 percent this year, and crude oil has climbed 20 percent. Oil fell today for the third straight session on speculation that the record price reached last week when North Korea fired at least seven test missiles was unjustified. Gold reached $873 an ounce in 1980 when oil costs doubled in a year and consumer prices rose to 12 percent.

``With the energy complex weak, it's taken a little momentum out of gold and the metals,'' said Tom Hartmann, an analyst at Altavest Worldwide Trading Inc., a futures brokerage in Mission Viejo, California.

Gold futures for August delivery fell $8.70, or 1.4 percent, to $626.10 an ounce on the Comex division of the New York Mercantile Exchange. The percentage drop was the biggest since June 19. Prices are down 14 percent from a 26-year high of $732 on May 12.

Silver futures for September dropped 29.5 cents, or 2.6 percent, to $11.11 an ounce. Prices are down 27 percent from a 25- year high of $15.20 on May 11.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

Oil surged to the record $75.78 a barrel on July 7 after the missile tests. Prices have climbed this year partly on concern that exports from Iran may be disrupted because of objections to its nuclear research. Iran doesn't plan to reply to a European Union offer aimed at ending the dispute over the program until the second half of August, Foreign Minister Manouchehr Mottaki said today.

Chart Signals

Gold has climbed in the past three weeks, approaching the midpoint of the May high and last month's low of $546.40 an ounce. Some traders who follow price charts said the rebound from the June low, a so-called retracement of 50 percent from the May drop, may cap the rally.

``We've had a 50 percent retracement from the high in gold prices,'' Hartmann of Altavest said. ``The market just got overbought.''

Gold may gain later in the summer when jewelers, the biggest buyers of the metal, resume purchases, some analysts said. Physical demand for gold accounted for about 70 percent of sales last year, according to the producer-funded World Gold Council.

``Our core view is that sideways trading is likely through July and August and that the risks lie more to the downside than the upside over the next month or two,'' John Reade, an analyst for UBS AG, said in a report. ``Beyond this, however, we continue to expect metals to perform well into the end of the year.''

The bank raised its three-month forecast for gold to $650 an ounce from $580.