Gold Overcomes Greenback's Rise

Updated from 12:59 p.m. EST

Renewed interest from investors took gold to multimonth highs Friday, despite a stronger U.S. dollar.

The spot price for bullion recently hit $666.70, the strongest since mid-July when it briefly pierced the $670 level. It's now within 9% of last May's peak of $725.75.

Futures prices rallied similarly, with contracts for April delivery of gold closing up $9.50 at $672.30 an ounce on the Comex division of the Nymex. The bullion exchange-traded funds that own stocks of gold bars were also up, with the streetTracks Gold Shares (GLD) and iShares Comex Gold Trust (IAU) both climbing 1%.

"We are seeing a pick-up in demand from India," says Kona Haque, a commodities analyst at the Economist Intelligence Unit in London. She says more stable prices have helped coax buyers back to the market.

As for the Western nations, demand was looking strong among small-scale operators.

"We have had uncommonly high retail demand recently," says Paul Tustain, founder of U.K.-based BullionVault.com, which provides an electronic-trading platform for retail gold investors. He says most interest is coming from Britain and the U.S., and although volumes are small, they could be reflective of broader appeal.

Likely hampering the rally was a firm U.S. currency. One dollar was buying 121.7 yen, up from 121.08 yen late Thursday. One euro would buy $1.2994 down from $1.3039 previously. The value of the dollar and gold tend to move inversely.

More bullish news for the dollar came from the Manhattan-based Economic Cycle Research Institute, whose Weekly Leading Index grew 4% in the period ended Feb. 2, marking the 16th straight increase. A week earlier, the WLI rose 4.7%. Despite the slightly smaller gain, it still suggests a strong economy and a firm currency.