Gold Futures Advance

Updated from 12:21 p.m. EDT

Gold prices rallied Friday after a mixed bag of economic data left the dollar down against other major world currencies.

April-dated bullion contracts added $6.80 to close at $653.90 an ounce on the Comex division of the New York Mercantile Exchange. The bullion exchange-traded funds that hold the metal were up also, with streetTracks Gold Shares(GLD Quote) adding 1% and iShares Comex Gold Trust (IAU Quote) ahead by 0.9%.

Industrial production jumped much more than the consensus forecast in February, according to new government statistics. Other fresh data showed core consumer prices growing as expected last month and consumer sentiment dipping in March.

"Our general view is that the dollar is heading lower," says Martin Murenbeeld, chief economist with the financial services firm Dundee Group in Victoria, British Columbia.

"The news on industrial production doesn't really change that," he adds, explaining that the current trade flows resulting in large deficits will eventually result in a devaluation of the greenback.

Recently, one dollar was buying 116.765 yen, down from 117.56 yen late Thursday. The euro was buying $1.3316, up from $1.3237 previously. The relative values of gold and the U.S. currency tend to move in opposite directions over time.

In other economic news, the weekly leading index grew 3.7%, compared with a rise of 3.3% in the prior period, according to the Manhattan-based Economic Cycle Research Institute, which publishes the indicator.

The reading suggests a robust U.S. economy in the months to come and, depending on exactly how strong business activity is, a possible change in interest rates by the Federal Reserve. A potential hike could lead to a dollar rally.