Oct. 7, 2009, 1:57 p.m. EDT
NEW YORK (MarketWatch) -- Gold futures soared to a record high just below $1,050 an ounce Wednesday, as investment demand rose and as the U.S. dollar remained relatively weak.
Holdings in the SPDR Gold Trust /quotes/comstock/13*!gld/quotes/nls/gld (GLD 102.33, +0.05, +0.05%) , the biggest exchange-traded fund backed by gold, rose for a third straight session to reach the highest level in three weeks.
'Gold has significant upside potential into 2010.'
Jason Kotick, Barclays Capital
In foreign-exchange dealings, the dollar rebounded slightly against the euro and the Japanese yen, but the dollar index /quotes/comstock/11j!i:dxy0 (DXY 76.51, +0.17, +0.23%) remained below the 77 mark.
Gold for October delivery surged to an intraday high of $1,048.20 an ounce, a new record for front-month gold futures. The contract was last up $3.90, or 0.4%, at $1,042.50 an ounce on the Comex division of the New York Mercantile Exchange.
Gold prices, as gauged by Comex front-month futures, have risen 18% this year.
Gold for December delivery, the most actively traded contract, gained $3.10, or 0.3%, to $1,042.70, a partial retracement after hitting an intraday high of $1,049.70.
"Gold has significant upside potential into 2010," said Jordan Kotick, an analyst at Barclays Capital, in a note. Technical analysis indicated that "resistance currently is at $1,370; history suggests a run at $1,500."
In the coming weeks, gold is likely to rise as high as $1,120 an ounce, he added. . . .
"The prime driver of the recent rally in the gold price ... was the weakening of the U.S. dollar," wrote analysts at Nomura International in a note to clients.
There is a very strong inverse relationship between the U.S. dollar and gold prices. When the dollar falls, gold prices tend to rise.
Gold's Wednesday highs topped the earlier record hit on Tuesday, when the dollar slumped on a report suggesting the end of dollar-based oil trading and as Australia hiked interest rates.
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