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Gold Prices Set New Record on Weak Dollar

ByAlix Steel, Alix Steel, Andrea Tse, Staff Reporters

(Gold story updated to reflect share-price changes) NEW YORK (TheStreet) -- Gold priceswere reaching new highs Thursday as investors piled into the safe-haven asset as the U.S. dollar continued to weaken. Gold for December delivery was adding $10.80 to $1,381.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Thursday has traded as high as $1,388.10 and as low as $1,371.10. The U.S. dollar index was slipping 0.69% to $76.54 while the euro was up 0.87% to $1.41 vs. the dollar. The spot gold price was adding more than $9, according to Kitco's gold index. Gold prices popped in early trading but then pared some of their initial gains as investors took profits at record high prices. Gold bulls are looking at $1,400 an ounce as the next resistance area as long as the U.S. dollar stays weak. The U.S. dollar was getting pounded Thursday after Singapore said it would let its currency trade in a wider range in order to let it appreciate in value and combat slowing growth. The news sent the Singapore dollar higher against the U.S. dollar. The dollar has already come under significant pressure as investors bet on the chance that the Federal Reserve will announce more monetary easing at its next policy-setting meeting in November. More dollars in circulation means the currency is worth less and investors are piling into gold as an alternative form of money. Gold is not only viewed as a type of money, but it also cannot be printed and the price cannot be manipulated as easily as paper currencies. Prices have risen 5.4% in October as investors jumped into the asset. Wednesday's double-digit price action, which is continuing Thursday, suggests that big buyers are entering the gold market and that despite minor profit-taking gold prices will head higher for the short term. "For now, short-term investor interest remains supportive for gold prices testing new highs," says Suki Cooper, analyst at Barclays Capital, "With our technical analysts noting gold in USD terms need a sustained break of $1,368 an ounce." James Moore, analyst at thebulliondesk.com, says that gold prices do look top heavy but that continued pressure on the U.S. dollar and longer-term inflation resulting from further quantitative easing by the Fed could push prices to $1,420 an ounce. Scott Redler, chief strategic officer at T3Live.com, was buying the SPDR Gold Shares when gold prices broke out Tuesday and Wednesday and is now selling some at these record levels. "I tier in and out -- will book some quick profits but stay long." Gold prices were also finding support Thursday from a weaker than expected initial jobless claims report for the week ended Oct. 8; claims rose by 13,000. The core Producer Price Index also rose 0.1%, which was in line with expectations. The number is viewed as an inflation indicator along with the core Consumer Price Index which is set to be released Friday. Inflation at low levels might also result in the Fed raising its long-term inflation target, currently between 1.5% to 2%. Such a move would mean more money printing over an extended period of time. Although Fed Chairman Ben Bernanke has said he is opposed to this move, further low inflation readings and slow growth might force his hand. Long-term money printing is only good for gold prices as investors move into the hard currency. Bernanke will be speaking Friday morning at a conference sponsored by the Federal Reserve Bank of Boston on monetary policy in a low- inflation environment. Investors will be looking for clues on the details of QE2. Silver prices were surging to a 30-year high adding 69 cents to $24.63, while copper was flat at $3.81. Silver is regarded as the poor man's gold and also a form of money that can retain more value over paper currencies. Gold mining stocks, a risky but profitable way to buy gold, ended lower Thursday. Kinross Gold tumbled 1.8% to $19.31. NovaGold Resources fell 0.3% to $9.56, while IAMGOLD lost 1.5% at $17.92. Goldcorp ended at $45.01, down 0.5%. --Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel. >To follow the writer on Twitter, go to https://twitter.com/adsteel. >To submit a news tip, send an email to: tips@thestreet.com.

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