NEW YORK ( TheStreet) -- Gold prices are moving to $1,300 an ounce on inflation worries, rumor of quantitative easing round II from the Federal Reserve and a lackluster global economy. Gold for December delivery Friday settled $3.70 higher to $1,277.50 an ounce on the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,284.40, another record, and as low as $1,273. The U.S. dollar index was adding 0.13% to $81.36 while the euro was down 0.22% to $1.30 vs. the dollar. The spot gold price was adding 90 cents, according to Kitco's gold index. Gold prices lost some steam Friday as the U.S's weak inflation reading tempered inflation fears that have been bubbling up around the globe. The U.S. consumer price index for August was unchanged from July but this was in opposition to a higher-than-expected producer price index reading on Thursday. The U.K. reported a higher inflation reading this week and India's central bank is taking steps to take money out of circulation to fight inflation. Friday is also quadruple witching in which options on stock index futures, stock options, stock index options and stock futures all expire, leaving traders having to rebalance their portfolios. This leads to more volatility especially in the gold market.
Nadler also called a time top in gold saying that in the next 12 months gold's 10-year bull-run will come to an end when investment demand cools. "It's possible that this market ... has anywhere from $50-$100 worth of life left in it." This would put gold prices at $1,360-$1,380 an ounce. George Soros, the seventh largest shareholder of the gold exchange-traded fund, SPDR Gold Shares ( GLD), is only 2.6% diversified into gold not counting gold mining stocks. So when gold hits a record high and investors hear $1,300 an ounce, the temptation is to rush in to buy so as not to miss the boat. Even the CEO of U.S. Gold Corp ( UXG), Rob McEwen, urges caution for new gold investors. "There will be corrections because nothing goes in a straight line," he said in a recent interview with TheStreet. "It'll go up, it'll correct, it'll consolidate and then move higher." McEwen believes that at some point there will be a mania in gold, but that the market isn't even close. "It's an iterative process that takes people a long
time and they finally go I've got to have some." McEwen thinks investment buying is a third of the way there. When buying reaches 100%, McEwen says to sell. "Gold is going to reach a point when its purchasing power relative to other assets is going be at its zenith and that's when you want to start thinking about trading out and going into the debt market or equity market and diversifying out into other investments." Silver prices settled 4 cents higher, after hitting a 20-year high, to $20.81 while copper prices closed up 2 cents to $3.52.
Gold mining stocks, a risky but profitable way to buy gold, were trading lower Friday. Freeport McMoran Copper & Gold ( GG) was flat at $81.66 while Eldorado Gold ( EGO) was losing 1.56% at $19.56. Other gold stocks New Gold ( NGD) and Gold Fields ( GFI) were trading at $5.90 and $14.90, respectively. -- 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 http://twitter.com/adsteel. >To submit a news tip, send an email to: email@example.com.
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