NEW YORK (
were rushing toward $1,400 as a brutal new-home sales report rallied traders to the safe-haven asset.
Gold for December delivery at the COMEX division of the New York Mercantile Exchange was surging $24.60 to $1,395.40 an ounce. The
traded as high as $1,397.30 and as low as $1,367.80 an ounce, while the spot price was adding $17.74.
Home sales were down 13% putting a shadow on the recovery and the overall economy, Thomas Power, senior commodities broker at RJO Futures, said in a phone call from Chicago.
The Census Bureau reported new home sales in July fell to 394,000 from the prior month's 455,000. Economists polled by
were expecting a seasonally adjusted annual rate of 490,000 in July.
Paired with pent-up physical demand in Asia and backwardation in COMEX gold futures contracts, the yellow metal could close above $1,400 an ounce on Friday for the first time since May 14.
"We're within inhaling distance of $1,400," George Gero, precious metals analyst at RBC Capital Markets, said on the phone from New York.
When asked if gold would close higher than $1,400 on Friday, Power said "yes," and added that if the precious metal closes above $1,420 on one of the next few trading sessions then the market could see a test for $1,500 -- a level not seen since April, when
gold witnessed a historic two-day collapse.
Gero, however, was less optimistic: "The question is will the rally continue, because it's Friday and Friday rallies are often met with profit-taking in the afternoon."
for September delivery were popping 73 cents to $23.78 an ounce, while the
U.S. dollar index
was sliding 0.21% to $81.31.
Gold mining stocks were climbing lockstep with gold prices. Shares of
Compania de Minas Buenaventura
, a Peruvian precious metals mining company, were jumping 4.4% to $14.25, while shares of
(NEM - Get Report)
were increasing 4.1% to $33.50.
One of the biggest laggards in the sector was
(GFI - Get Report)
, which was dropping more than 4% for the second day in a row following weaker-than-expected second-quarter earnings and ending its dividend.
SPDR Gold Trust
was up 1.6%, while
iShares Gold Trust
was climbing 1.5%.
-- Written by Joe Deaux in New York.