Gold futures rose higher on Friday and recorded a third straight weekly gain of almost 3 percent as weakness in the U.S. dollar a and surging energy costs boosted the demand for the precious metal as a hedge against inflation.

Gold for June delivery closed $7.50, or 0.8 percent, higher at $925.80 an ounce on the New York Mercantile Exchange. The metal is up 2.9 percent this week after gaining 4.9 percent in the previous two weeks. Gold closed last week at $899.90.

With increasing doubts about the sustainability of the recent rebound of the dollar and of global stock markets, safe haven demand for gold is likely to reaccelerate in the coming weeks, said Mark O'Byrne, a director at Gold and Silver Investments Ltd., in a note to clients.

The dollar dropped against major counterparts as oil prices continued to strengthen.

The dollar index, which measures the currency against a basket of six major currencies, was at 71.925, down from 72.147 in late North American trading Thursday.

Poor home sales and inventory data continued to weigh on the greenback as they underscore that however shallow this contraction may be, the U.S. is now in its 27th month of the rout in housing, with another possible six to twelve to go, said Jon Nadler, a senior analyst at Kitco Bullion Dealers.

Crude for July delivery was last up $1.39 at $132.20 a barrel and seems set to stay up for a third straight week.

Also on the Nymex, Silver futures for July delivery peaked at an all time high of $18.33, its highest level since April 17, and closed up 26 cents at $18.29 an ounce.

July platinum fell $7.50 to close at $2,176.30 an ounce while June palladium tacked on 35 cents to end at $457.30 an ounce on Nymex. July copper added 3 cents to finish at $3.736 a pound.

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