Gold Futures Extend Rally

February-dated futures jump $6.60 to close at $636.90 an ounce.
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The dollar was weaker against the euro Thursday despite buoyant economic news, helping drive gold higher.

Prices for February-dated futures jumped $6.60 to close at $636.90 an ounce on the Comex division of the New York Mercantile Exchange. The bullion ETFs,

iShares COMEX Gold Trust

(IAU) - Get Report

and

streetTRACKS Gold Shares

(GLD) - Get Report

, were also gaining, up about 1.1% recently.

"Mostly it's been dollar-watching," says James Moore, a gold analyst at

TheBullionDesk.com

. "But the market has been thin, and the move shows we are very much in holiday mode."

Recently, one euro would buy $1.3147, up from $1.3125 late Wednesday. The dollar was doing marginally better elsewhere, buying 118.924 yen, vs. 118.78 previously. Over time, gold and the greenback tend to move in opposite directions.

A basket of favorable statistics on the U.S. economy did help partially stem the dollar drop against the euro, but did nothing to baffle the bullion rally.

Standing out among the data was news showing better-than-expected home sales. The National Association of Realtors says sales of existing dwellings reached a 6.28 million annual pace in November, besting consensus forecasts of 6.15 million. In October, preowned homes were sold at a 6.24 million rate.

Some economists have been concerned that home sales would stall and drag on the economy.

New information on consumer confidence, manufacturing and unemployment claims were favorable also. Taken together, the reports paint a picture of a healthy U.S. economy, and that could help buoy the dollar and perhaps stymie a gold rally.

"If the dollar does start to appreciate that would be headwind for gold," says Michael Darda, chief economist at MKM Partners in Greenwich, Conn. "I think the dollar will respond as rate expectations morph" from forecasts of a cut to ones of flat or even increased rates.

Back in gold, the European Central Bank says it sold 41 million euros of gold and receivables in the week ended Dec. 22, or slightly less than 3 tons.

Turning to base metals, Comex copper contracts closed down 1.9 cents at $2.895 a pound.