Comex Gold Hits New Record
Source: Kitco, Jim Wyckoff (10/6/10)
"Gold hits new all-time record high of $1,351/oz. in December futures."
The U.S. Dollar Index is trading near steady, but did hit another fresh 8.5-month low overnight. The euro hit some turbulence overnight as reports said Fitch just downgraded Ireland's credit rating.
Most agree gold's latest surge has been due in major part to the slumping greenback, as many investors believe a fresh round of QE is in the offing, possibly in early November. That's strongly dollar-bearish. The Bank of Japan and the Reserve Bank of Australia CBs this week announced they are adopting more stimulative monetary policies, which ostensibly "sets the table" for a U.S. stimulative package soon. If and when the Fed announces a fresh monetary stimulus package, I would not be surprised to see the U.S. Dollar Index actually rally, and it could even put in a near-term low. Why? Traders and investors are already factoring into the markets' pricing structure the much-expected U.S. QE. Once that is officially announced, traders may well adopt a "buy the rumor, sell the fact" scenario, a phenomenon widely known by veteran market watchers.
Gold investors should be aware of this distinct possibility, as gold prices could see a significant downside price correction if the U.S. Dollar Index does put in a near-term market bottom.
The major U.S. economic report this week is Friday's jobs report. A stronger-than-expected jobs report would likely provide a lift for the U.S. Dollar Index and be bearish for the gold market.