Gold Surges, Within 'Inhaling' Distance of $1,400

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), a Peruvian precious metals mining company, were jumping 4.4% to $14.25, while shares of Newmont Mining ( NEM) were increasing 4.1% to $33.50.

One of the biggest laggards in the sector was Gold Fields ( GFI), 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) was up 1.6%, while iShares Gold Trust ( IAU) was climbing 1.5%.

-- Written by Joe Deaux in New York.

>Contact by Email.

If you liked this article you might like

Why I Bought Gold (and Think It Could Hit a Record High in 2018)

Why I Bought Gold (and Think It Could Hit a Record High in 2018)

Time to Play Gold -- But Not the Way You're Thinking

Time to Play Gold -- But Not the Way You're Thinking

How to Tackle Investing: Cramer's 'Mad Money' Recap (Wednesday 2/14/18)

How to Tackle Investing: Cramer's 'Mad Money' Recap (Wednesday 2/14/18)

Bridgewater's Ray Dalio Gets More Bullish on Gold Amid Warnings of Recession

Bridgewater's Ray Dalio Gets More Bullish on Gold Amid Warnings of Recession

Seeing Good Action in Several Stocks, Buying More MJ, Gold

Seeing Good Action in Several Stocks, Buying More MJ, Gold