NEW YORK—Gold prices shot up Thursday after crude oil surged early in the day, an inflationary move that fed buying of precious metals as safe, alternative investments.

Oil eventually closed lower, as did other commodities; soybeans, rice, gasoline and heating oil futures all declined.

Gold for June delivery jumped $13.50 to settle at $880 an ounce on the New York Mercantile Exchange, after earlier rising as high as $888.50.

“We’ve seen projections for $150 crude so that’s adding to inflation fears and helping gold,” said Carlos Sanchez, analyst with CPM Gro...