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Gold Rebounds for Higher Close

April delivery bullion contracts climb $1.40 to $672.80 an ounce.

Updated from 11:24 a.m. EST

Gold futures overcame a slow start and a firmer dollar to end trading modestly to the upside Friday.

April delivery bullion contracts climbed $1.40 to $672.80 an ounce on the Comex division of the New York Mercantile Exchange. The

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, which follows futures prices, dipped 0.3%.

Despite Commerce Department data showing that housing starts fell much more than expected in January, the news wasn't reflected in a lower dollar. That may be due to a change in the way the market is viewing potential actions by the

Federal Reserve

toward fighting inflation.

Fed Chairman Ben Bernanke presented two days of economic testimony to the U.S. Senate Wednesday and the House on Thursday in which he carefully outlined his views.

The market now sees Bernanke as targeting inflation alone and not in conjunction with unemployment, explains says Joseph Brusuelas, chief economist at IDEAglobal, in New York. "If there is any cyclical change in expectations, then you could see a swing in market sentiment toward higher rates."

Such news would be bullish for the greenback and bearish for gold, which tends to move lower in value when the dollar strengthens.

One euro was recently selling for $1.314, down from $1.3145 late Thursday. One dollar was buying 119.26 yen, up from 119.22 yen previously.

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Elsewhere, the Economic Cycle Research Institute published data showing a 3.5% rise in its weekly leading index in the period ended Feb. 9, marking the 17th straight uptick. ECRI says the indicator grew a revised 4.3% in the prior period. Although the trend is still one of growth, the last two data points could show the beginnings of a deceleration pattern, or a slower rate of increase.

Turning to the technical side of things, at least one chart watcher thinks the stall in the gold price surge, which has seen spot prices rise from a low of about $608 in early January to around $665 recently, may be the start of something bearish.

"I think we are just about near the end of the rally leg that began in October," says Steve Hochberg, chief market analyst at Elliott Wave International in Gainesville, Ga., noting that major chart resistance at around $690 could stymie any attempt at a near-term breakout.

"I think the next leg down will be a lot longer and deeper than a lot of gold bulls think at this stage. Our target is somewhere around $450 to $495," says Hochberg.

He also notes a divergence between the mining equities and the bullion price. While the recent gold price rally has taken the bullion ETFs,

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, past their September highs, the Philadelphia Gold and Silver Sector Index has languished below that level.

The index closed at 143.12, off 1.1% and down from above 150 in early September. Spot bullion climbed to almost $640 around the same time.

Such a divergence, he says, points to an over-extended price.

Turning to base metals, May delivery copper slipped 2 cents to $2.66 a pound on the Comex. The decline was likely sparked by the weaker construction data. Copper is used for electrical wiring in home construction.