Record breaking Price of Gold

Wednesday the 29th September, 2010 highly demanded Gold extended its record-breaking streak as investors continue to scoop up the precious metal amid fears about the economy.

Gold futures for December delivery, the most active contract, rose $6.50 to $1,314.80 an ounce in global trading, surpassing its previous intra-day trading high of $1,311.80 reached Tuesday.

 Gold also settled at the record high of $1,310.30 per ounce, $2 higher than the prior record, set on Tuesday.

A falling dollar and mixed economic reports that suggest the recovery is sluggish at best have recently boosted the safe-haven appeal of the precious metal. Gold is up 5.9% this month and has surged nearly 32% year-over-year.

Lending to gold's rally, investors expect the Federal Reserve to buy more U.S. Treasurys in November in a move to stimulate the economy. That act, referred to as quantitative easing, would drive U.S. yields down and make Treasurys and the dollar less attractive safe-haven investments.

At the same time, cost-cutting measures implemented by governments around the world to narrow their fiscal deficits are expected to eat into growth, said Kathy Lien, director of currency research at Global Forex Trading.

"So with the Fed easing monetary policy and growth expected to slow in Europe, investors are not left with many alternatives except for gold," she said in a research note.

Despite the record, gold is still far from its real peak, as measured in dollars adjusted for inflation.

After the Iran hostage crisis and ahead of the Soviet Union invasion of Afghanistan, gold prices hit their true peak on Jan. 21, 1980, when a settlement of $825.50 an ounce translated into an all-time peak of $2,163.62 an ounce in 2009 dollars.

Record breaking Price of Gold

Stocks test price floors amid wave of selling

Investors know all about the economic and geopolitical headwinds hurting stocks. Debt problems in Greece spreading to other European countries. Crude oil gushing into the Gulf of Mexico. Korean saber-rattling.

The latest blow came Friday: a fragile U.S. economy unable to create enough private-sector jobs to quell fears of an economic relapse.

The newest obstacle? The negative price action of stocks themselves. The Dow Jones industrials fell 115.48 points Monday, capping a two-session drop of 439 points and closing at 9816.49, a fresh 2010 low. Analysts who measure the market's health by studying the price charts of major stock indexes are starting to warn of serious deterioration. They say if the downdraft is not halted soon, it could lead to a second leg down and an official bear market, or 20%-plus drop.

The Dow is 12.4% below its late April peak, and the Standard & Poor's 500 is down 13.7%.

As is often the case when stocks are falling, Wall Street points to certain price levels that amount to a "last line of defense" for the stock market, says money manager Gary Kaltbaum. In general, if buyers appear and stocks can stay above prior lows deemed important, it's a sign of strength. The flip side: If these levels give way, it's a sign buyers are not willing to step up, and lower prices are likely.

Many — but not all — of the market's support levels have already been violated. Both the Dow and S&P are now below their 200-day trend lines, which historically has meant the market is in, or close to, a downtrend. "It's bearish," Kaltbaum says.

Both indexes have also fallen below their panic-induced intraday lows hit during the May 6 "flash crash," as well as the closing levels hit in the last nasty correction back in early February.

The last line in the sand for stocks is the 1045 level on the S&P 500, its intraday low hit on Feb. 5, many analysts say. "There was a tremendous amount of pessimism back then, stocks were oversold, and the market turned up," says Bruce Bittles, chief investment strategist at R.W. Baird. "If we don't hold those levels, we are looking at a 20% bear market drop." The S&P closed at 1050.47 Monday.

A potential positive: Neither the Dow nor S&P 500 are down more than 15% from their highs. That's good news, as S&P data show that bear markets have occurred 80% of the time since 1946 when a market correction goes beyond 15%.

Stocks test price floors amid wave of selling