Gold futures on the COMEX division of the New York Mercantile Exchange rose to a 11-week high level on Friday after sales of new U.S. homes fell more than forecast, boosting speculation that the U.S. Federal Reserve will maintain its fiscal stimulus program.

The most active gold contract for December delivery rose 25 U.S. dollars, or 1.82 percent, to settle at 1,395.8 dollars per ounce. Gold advanced 1.8 percent this week, the third straight gain, partly on signs that physical demand is increasing in Asia.

Sales of new U.S. homes dropped 13.4 percent to a seasonally adjusted annual rate of 394,000 in July, the lowest rate since October, according to U.S. government data. Economists polled by MarketWatch had expected sales to pull back in July to a rate of 485,000, reports said.

Analysts say, the falling new home sales data signals that the Fed needs to continue to support the economy growth. The U.S. housing recovery is an important factor that the Fed will be looking at when it makes a decision on the timing of the tapering.

The World Gold Council estimates that sales will reach as much as 1,000 metric tons this year in both China and India, the world' s largest buyers. Silver for September delivery rose 70.3 cents, or 3.05 percent, to close at 23.738 dollars per ounce.