COMEX gold futures price hits new record high over $1111 as Dow rises 200 points

Wall Street continued its rally, pushing the Dow Jones Industrial Average to a 13-month high, as investors sought resource and financial shares. Gold futures again reached record levels, as the US dollar sank. Crude oil futures also went higher. The Dow closed 203.52 points up at 10,226.94, the highest finish since 3 Oct 2008. NYMEX crude oil prices for Dec 2009 delivery climbed for the first time in three days, rising to $US79.10. The rise came as oil and natural gas companies in the Gulf of Mexico evacuated workers and halted some output as Tropical Storm Ida blew through the region.

Gold futures climbed to a record for the second straight session as the slumping dollar spurred demand. COMEX gold futures for Dec 2009 delivery rose $US12.40 to $US1108.10 an ounce in New York. Earlier, gold prices reached a record high of $US1111.70. The dollar weakened to a 15-month low against the currencies of major trading partners after G20 nations agreed to maintain economic stimulus measures, encouraging investors to buy higher-yielding assets. The dollar depreciated in the biggest decline in four days. The EUR/USD forex rate touched $US1.5020, the weakest level since October 26.

- While gold futures have been setting record highs, silver futures have been holding their own as well above the $17 level. As a commodity, gold price movements seem arbitrary but if you treat it as a currency versus other currencies a clearer picture emerges, hence some of the online discussions re: gold commodity or currency? And if you are into gold trading, it is not really necessary that you go into the futures or options markets. Pick a gold ETF which will serve you well - and of course there's no doubt that GLD, the SPDR Gold Trust, is the proverbial $37 billion elephant in the room.

As for the current COMEX gold price, I would say that it may be heading into short-term overbought territory in the $1100 to $1200 range. Personally I am lightening up a little but regular readers know that I'm of course a long term gold, energy and general resource bull, hence the title of this blog : "Inflation, Investing and Everything". In the grand scheme of things, $1000 or $1100 gold prices are quite possibly just milestones on the way to greater heights. And with USDX, the US Dollar Index, doing its falling-below-76 thing, the gold-as-an-investment crowd will only get larger over time.

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