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Data Spur Gold Rally

Contracts for June delivery add $6.70 at $686.40 an ounce.

Gold prices were on the rise again Friday as a mixed bag of economic data left the greenback weaker.

Contracts for June delivery of gold were adding $6.70 at $686.40 an ounce on the Comex division of the New York Mercantile Exchange. The bullion exchange-traded funds that hold the metal were rising also.

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were each up about 1%.

The government published better-than-expected trade deficit figures for February and zero inflation in the core rate of the producer price index for March. But that fair news was more than offset by a bigger-than-forecast decline in consumer sentiment as measured by the University of Michigan.

"Everyone is really focused on the consumers because they represent a large portion of the economy," says Ellen Beeson Zentner, an economist at the Bank of Tokyo-Mitsubishi in New York. If consumers do cut back on spending then that would hurt future growth and undermine the U.S. currency, she explains.

One dollar was recently buying 118.755 yen, down from 119.09 yen late Thursday. Euros were trading for $1.354, up from $1.349 previously. The value of the U.S. currency and the price of gold tend to move in opposite directions over time.

The Michigan survey also showed rising expectations about inflation, a factor that will help boost bullion prices. Some investors purchase gold as a hedge against the asset-withering effects of generally rising consumer prices.

The worries about future inflation combined with a slowing economy, puts the

Federal Reserve

in a bit of a bind, explains Gregory Miller, chief economist at SunTrust Bank in Atlanta.

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"That means the markets will be stuck in the Chinese water torture of volatility, but with no trend," Miller says.

In the precious metals patch, shares of gold companies

Golden Star Resources

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(IAG) - Get IAMGOLD Corporation Report

were rallying 2.3% and 0.5%, respectively.

As for base metals, benchmark Comex copper contracts were adding 3 cents at $3.53 a pound in recent action.

"A driving factor for prices has been news of labor unrest in Chile and Indonesia at two of the world's largest copper mines," says Robin Bhar, a base metals strategist at UBS in London. Concerns over supply are currently uppermost in the mind of industrial buyers of the physical metal, he explains.

Looking forward, Bhar says investors should keep an eye on the psychologically important $8,000 a ton level -- $3.63 a pound -- which if breached could spark a round of short covering by speculators, possibly taking prices back to last May's highs of around $4 a pound.

The buoyant copper price didn't seem to help shares of miner

Southern Copper


, which were dipping 0.1% recently.