NEW YORK (

TheStreet

) --

Gold prices

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

gold price

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

Thomson Reuters

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."

Silver prices

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

(BVN) - Get Report

, a Peruvian precious metals mining company, were jumping 4.4% to $14.25, while shares of

Newmont Mining

(NEM) - Get Report

were increasing 4.1% to $33.50.

One of the biggest laggards in the sector was

Gold Fields

(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.

Gold ETF

SPDR Gold Trust

(GLD) - Get Report

was up 1.6%, while

iShares Gold Trust

(IAU) - Get Report

was climbing 1.5%.

-- Written by Joe Deaux in New York.

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