Gold sets another record

By Alix Steel, TheStreet

Updated at 4:39 p.m. ET

Gold prices set another record high Thursday despite pressure from a stronger U.S. dollar and investors selling their positions to cash in on the metal's rally.

Gold for December delivery settled $4.20 to $1,296.30 an ounce at the Comex division of the New York Mercantile Exchange. Gold Thursday has traded as high as $1,297.50 and as low as $1,288.20.

Stocks began to sell off near the end of the day, and the Dow Jones Industrial Average ($INDU) ended up losing 77 points to 10,662. The S&P 500 ($INX) closed 9 points lower to 1,125, and the Nasdaq ($COMPX) dropped 7 points to finish at 2,327.

The U.S. dollar index was rallying 0.2% to $79.96, while the euro was losing 0.4% to 1.33 against the dollar. The spot gold price was up $1.80, according to Kitco's gold index.

After gold reached a new intraday high Wednesday of $1,298 an ounce, some investors were selling their positions to take profits. But a jump in weekly initial jobless claims to 465,000 helped to support prices.

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Experts predict that gold will break $1,300 relatively soon as the buying frenzy is backed up by global currency concerns.

The Bank of Japan's recent intervention in the currency market to help the yen drop in value wasn't enough, and rumors are that the central bank will have to intervene again to force the yen lower.

The news, coupled with the growing consensus that the Federal Reserve will begin another round of monetary easing soon, highlights the fragility of paper currencies and makes gold all the more appealing as a safer form of money.

The dollar was rebounding slightly Thursday on the back of a weaker euro. The euro was struggling after September's eurozone manufacturing purchasing managers index came in weaker than expected at 53.60, led by a disappointing number out of Germany.

A stronger dollar makes gold, which is priced in the currency, more expensive to buy elsewhere. But for the long term, most analysts expect the U.S. currency to struggle.

"The . . . weaker dollar . . . will continue to provide background support," James Moore, an analyst at thebulliondesk.com, said in his daily metals report.

At the Denver Gold Forum this week, the CEOs of the major silver and gold mining companies said gold will head higher, with price targets anywhere from $1,500 to $2,500 in the next three to five years. But some warned that a correction might hit the market in the short term.

"I think we have many years left in this cycle," said Bradford Cooke, the CEO of Endeavour Silver (EXK), but "it's time for a pullback. We're way overdue for a summer correction, . . . and I think that pullback is starting right away."

Silver prices settled up 16 cents at $21.21 per ounce, while copper closed up 3 cents at $3.59 per pound.

Gold mining stocks, a risky but potentially profitable way to buy gold, closed mostly lower Thursday. Barrick Gold (ABX) lost 1.1% to $46.71 and Newmont Mining (NEM) was 1.7% lower at $63.85. Randgold Resources (GOLD) fell 1.4% to $101.30 while AngloGold Ashanti (AU) finished flat at $45.85.

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