NEW YORK (TheStreet) -- Gold prices were dipping lower Monday as investors took profits and the U.S. dollar strengthened.
Gold for December delivery was losing $6.70 to $1,391 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Monday has traded as high as $1,398.50 and as low as $1,386.60.
The U.S. dollar index was adding 0.63% to $77.03 while the euro was losing 0.7% to $1.39 vs. the dollar. The spot gold price was down $1.90, according to Kitco's gold index.
Gold prices rallied 2.7% last week after the Federal Reserve announced its $600 billion asset purchase program which pushed gold towards $1,400 an ounce. Despite small bouts of profit-taking, most analysts expect gold to continue its inverse dollar dance in the short term and advance higher.
Gold "remains vulnerable to risk reduction and short-covering rallies in the dollar," says James Moore, analyst at thebulliondesk.com. Moore, however, believes that investors will continue to move into gold as protection against the Fed's looser monetary policy.
Investors turn to gold as a hedge against inflation, which many fear will be the inevitable long-term result to the Fed's bond purchase program as more dollars in circulation makes the currency worth less. Any dips in price will most likely be met with solid bargain-hunting.
The U.S. is coming under some heat from the international community for its quantitative easing, round two, which is set to take center stage at the G-20 meeting in South Korea later this week. The worry is that the U.S. is purposely pushing the dollar lower in order to improve its exports and help the economy while other higher-yielding currencies like the Brazilian real rise in value.
Although the meeting isn't expected to change Federal Reserve policy, it will highlight the fragility of global currencies and only increase gold's appeal as hard money that retains value. Recent comments in the Financial Times from Robert Zoellick, president of the World Bank, have only supported that thesis.
Zoellick said that there needs to be a global "co-operative monetary system" involving multiple currencies as well as using gold as an "international reference point of market expectations about inflation, deflation and future currency values." Zoellick says that gold is not old money but that markets are using the metal as a viable alternative to paper currencies.
Silver is also shinning along with gold as a "cheaper" hard currency. Prices have rallied to 30-year highs, currently adding 7 cents to $26.82 per ounce, while copper was flat at $3.94.
Both metals were stronger after the Labor Department said Friday that 151,000 jobs were added in October, which was better than expected. The news along with strong corporate earnings have painted a modestly optimistic picture of a global economic recovery which means more demand for industrial metals.
Gold mining stocks, a risky but profitable way to buy gold, closed relatively flat Friday. Barrick Gold was down 0.20% to $49.21 while Newmont Mining ended 0.16% higher at $61.62. Other large gold stocks Randgold Resources and AngloGold Ashanti closed at $97.01 and $49.31, respectively.
