July 14 (Bloomberg) -- Gold rose to a six-week high as investors bought the metal as a haven and a hedge against inflation, after escalating violence in the Middle East pushed crude oil to a record.

Gold has jumped 8.4 percent this month, after falling in May and June, as bombings in India and North Korea's missile tests. Investors sought the safety of gold and Treasuries today as global equity markets declined. Israeli forces attacked Lebanon for a third day. Hezbollah, a terrorist organization that's backed by Iran and Syria, sparked the conflict when its forces kidnapped Israeli soldiers in a cross-border raid.

``People are moving out of riskier assets, and into treasuries as well as gold,'' said David Holmes, director of precious metals at Dresdner Kleinwort Group in London. ``Investor demand for gold has pushed the price higher.''

Gold for August delivery rose $13.60, or 2.1 percent, to $668 an ounce on the Comex division of the New York Mercantile Exchange, after reaching $669, the highest for a most-active contract since May 30. Gold for immediate delivery rose $6.90, or 1 percent, to $666.95 at 7:05 p.m. in London, up 6 percent this week.

The Standard & Poor's 500 Index fell for a third day, down 0.5 percent to 1236.20 at 4:21 p.m. in New York, and the Dow Jones Industrial Average fell 1 percent.

Crude oil for August delivery rose 33 cents to $77.03 a barrel on the New York Mercantile Exchange, after earlier trading at a record $78.40. Oil has rallied 33 percent in the past year.

Gold, Oil

``We also see buying in oil,'' Holmes said. Oil and gold markets ``are responding to the political uncertainties in the Middle East,'' he said.

Some investors buy gold as a store of value. Gold futures rose to $873 an ounce in 1980, the highest ever, after oil costs more than doubled and consumer prices reached 12 percent.

``Flight-to-safety buying has been a major catalyst in gold's gains this week and is likely to be a feature next week,'' said James Moore, a Kettering, U.K.-based analyst at TheBullionDesk. Tensions in the Middle East and North Korea ``are likely to deepen before some form of agreement is met.''

As oil approaches $80, gold may be headed for $680, said Moore, who recommends buying gold next week.

Gold climbed 2.2 percent last week in London as North Korea test-fired missiles into the Sea of Japan. Bullion surged 5.3 percent on Sept. 11, 2001, the first day of trading after terrorists attacked the U.S.

Weekend Worry

``Geopolitical tensions can't be discounted,'' said Paul McLeod, vice president of precious metals at Commerzbank Securities in New York. ``You don't want to go into a weekend short of gold.''

Israeli jets hit buildings in the Hezbollah headquarters in southern Beirut in the pre-dawn hours as well as a section of the highway to the Syrian capital, said a spokeswoman for the military, speaking on condition of anonymity.

``You're not going to have any peace over the weekend so you have to be betting on the upside for gold,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. Gold may decline ``should there be any easement of tensions'' next week.

Crude oil may rise to a record next week on concern the growing conflict in the Middle East will disrupt shipments from the region, according to 20 of 34 analysts and traders surveyed by Bloomberg News. The Middle East is the source of 30 percent of the world's oil.

``Gold has its work cut out for it,'' said Tom Hartmann, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``A lot depends on so many unknown factors in the Middle East. If Israel backs down, that's going to relax gold prices a little bit. Gold may back down to $650.''

``I am long-term bullish on gold,'' said Friedrich Kernstock, an analyst at Kernco Metal Trading GmbH in Vienna. ``It will hover at these levels of $650 to $670 for the next week and go straight up afterwards.''

Silver for September delivery rose 4.5 cents, or 0.4 percent, to $11.53 an ounce on the Comex.

To contact the reporter on this story: Julie Tay in London at jtay1@bloomberg.net; Choy Leng Yeong in Seattle at clyeong@bloomberg.net

Last Updated: July 14, 2006 16:24 EDT