Gold Takes a Breather After Hitting Another Record High

Gold prices weakened Wednesday after setting a new record closing high in the previous session as concern over the health of the European banking sector ebbed.

Gold futures for December delivery, the most heavily traded contract on the Comex division of the New York Mercantile Exchange (CME), rose above $1,260 an ounce in early trades but ultimately closed down $2.50 at $1,257. On Tuesday the precious metal, which is thought to offer a hedge against financial instability and inflation, rose $8.20 to settle at $1,259.30 an ounce, surpassing its old nominal record closing high set in late June.

On an inflation-adjusted basis gold would need to more than double to break the real all-time high of $2,358 set in early 1980, when the federal funds rate stood at about 12%. Today's fed funds target rate stands at 0% to 0.25%.

Strong demand at an auction for Portugal's sovereign debt helped allay European debt fears Wednesday, allowing major market indexes in the U.K. and Continent to erase earlier losses. The euro gained against the dollar, hitting $1.2745 in late morning trades.

Gold prices have risen sharply over the past three weeks as the euro has come under pressure. See the chart below, courtesy of Capital IQ.

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I want the dollar back on the gold standard to stop the printing and diluting of our dollar! please! and by the way...audit The Fed...

September 09 2010 at 8:28 AM Report abuse rate up rate down Reply
Robert & Lisa

Wonder what else Beck might be right on. Obama?

September 09 2010 at 7:43 AM Report abuse +1 rate up rate down Reply
Robert & Lisa

Even though he isn't considered an expert, anyone who has followed Glenn Beck's advice for the past 2 years is up over 100% in dollar terms... How about that?

September 09 2010 at 7:42 AM Report abuse rate up rate down Reply
Robert & Lisa

And gold is right back up today. Confounding the "experts" as usual

September 09 2010 at 7:39 AM Report abuse +1 rate up rate down Reply
Robert & Lisa

Our nation has turned away from wisdom and embraced a corrupt communist and elected him as President. We will pay dearly for that.

September 09 2010 at 7:37 AM Report abuse +1 rate up rate down Reply

In 1999, the Dow was 10,000 and gold was $350/oz. i.e it took 28.6 oz. of gold to "buy" the Dow. Now the Dow is 10,300 and gold is $1250/oz. i.e. it takes 8.2 oz. of gold to "buy" the Dow. Enough said about gold vs. stocks over the past 10 years.

September 09 2010 at 5:31 AM Report abuse +4 rate up rate down Reply
Robert & Lisa

The more government parasites Obama hires, the weaker our country becomes. And just as parasites left unchecked will kill a host animal, they will kill us. The right to tax is the right to destroy.

September 08 2010 at 9:42 PM Report abuse +2 rate up rate down Reply

Mother Jones ran a great artcle about gold last issue. The illustration accompanying the story was of Glen Beck as the Golden Calf as in Exodus chapter 32. The picture alone was worht the price of the magazine.

September 08 2010 at 8:07 PM Report abuse -2 rate up rate down Reply
1 reply to otterdad48's comment

I always thought that Ronald Reagan was America's Golden Calf.

September 09 2010 at 3:05 AM Report abuse rate up rate down Reply

I read nothing but horror stories about Gold and silver ETFs. Safer to buy the physical metal.

September 08 2010 at 6:20 PM Report abuse +6 rate up rate down Reply
Robert & Lisa

The more people Obama has working for the government the less products and services are produced so that means a standard of living decrease. If you have 3 people producing in the private sector and 1 government worker what happens when you have only 2 people producing and 2 on the government bandwagon? What if 3 people go to the government? Standard of living continues to fall and we end up like Mexico. How is it, the average worker in Mexico makes $6 a day and yet they boost the richest man in the world? Big government produces poverty for the masses as in Cuba, Mexico, Iran, Egypt, North Korea...

September 08 2010 at 6:19 PM Report abuse rate up rate down Reply