Gold in New York jumped $12 an ounce to the highest in two weeks as rising energy costs boosted the appeal of the precious metal as a hedge against inflation.

Gold has gained 27 percent this year, while oil climbed 22 percent. The average U.S. retail price of regular gasoline rose to $3.004 a gallon in the week ended July 31, the highest since the record $3.069 on Sept. 5, government data showed. Some investors buy gold as an inflation hedge when energy expenses increase.

``Gold is going up with the energies,'' said Domenick Nardo, a gold trader at FIC Commodities in New York. ``You've still got inflationary pressures.''

Gold futures for December delivery rose 1.9 percent to $658.80 an ounce on the Comex division of the New York Mercantile Exchange, the highest close since July 14. The metal is up 51 percent from a year ago.

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

Crude-oil futures for September climbed as much as $1.05, or 1.4 percent, to $75.45 a barrel on supply concerns. Tropical Storm Chris, the third named storm of the Atlantic hurricane season, formed in the Caribbean. It is heading west-northwest, toward the Gulf of Mexico, where rigs provide about a quarter of U.S. oil production.

Gold reached $873 an ounce in January 1980 after oil costs doubled in a year, spurring a surge in the inflation rate. Gasoline prices are up 30 percent from a year ago.

A U.S. government report today showed the Federal Reserve's preferred gauge of inflation increased 2.4 percent in June from a year earlier. The gain was the most since September 2002.

A separate report from the Institute for Supply Management showed that prices paid for raw materials rose last month by the most since October, and manufacturing accelerated.

`Bullish Again'

``Inflation is starting to creep into people's minds again,'' said Carlos Perez-Santalla, a gold trader and president of Hudson River Futures in New York. ``I'm bullish again.''

Gold's gains may be limited should the Federal Reserve raise interest rates next week to curb accelerating prices, boosting the dollar, some analysts said.

``If they were looking solely at inflation numbers, they still have another rate hike coming, and that's negative for gold,'' said Frank Lesh, trader and analyst at FuturePath Trading LLC in Chicago.

Gold generally moves in the opposite direction of the dollar. The Fed has raised the overnight lending rate 17 consecutive times since June 2004 to 5.25 percent.

A rate decision is expected on Aug. 8.