Gold futures hit new record highs in trading today, soaring above $1,150 an ounce on weakness in the dollar and gold’s appeal as an “alternative currency.” Matt Whittaker for The Wall Street Journal says that in additional to seasonal jewelry buying, gold’s demand is feeding on itself. As the price goes higher, it entices more investors to buy bars and coins for themselves. (Read about the new gold miners ETF).

Where gold goes from here is anyone’s prediction.

The case for a correction: some analysts think gold is overbought, and that a correction could be just around the corner. At the moment, says Rediff Business, gold is getting support from a weak dollar.

The case for more: John Wasiliev for The Age reports that there are numerous near-term factors supporting the price of gold, he says, all underpinned by a volatile but generally depreciating U.S. dollar. Chinese and Indian investors are also creating plenty of demand for the precious metal. (Other reasons gold prices could inch higher yet.)

For now, investors are still cautious about another market pullback. This trepidation is giving  reinforcement to related gold investments. But if a correction shows up anytime soon, have an exit strategy at the ready. Our strategy is to use the 200-day moving average; if gold dips below this line, it’s a sell signal.  (How to follow trends).

The largest gold ETF, SPDR Gold Shares (NTSEArca: GLD) now has holdings at 1,113.833 tonnes, down from a record 1,134.03 tonnes in June, reports Chikako Mogi for Reuters.

For more stories about gold, visit our gold category.

• iShares COMEX Gold Trust (NYSEArca: IAU): up 29.3% year-to-date

• ETFS Physical Swiss Gold Trust (NYSEArca:SGOL): up 15.3% since inception

• SPDR Gold Shares (NYSEArca: GLD): up 29.4% year-to-date

For full disclosure, Tom Lydon’s clients own shares of GLD.

Equities slid on Wednesday morning as an unexpected drop in home construction raised concerns about the pace of the economy’s recovery, say Stephen Bernard and Tim Paradis for the Associated Press. The U.S. Commerce Department reported that the construction of homes and apartments as well as building permits, a key gauge of future activity, fell well short of expectations held by economists. The puts into question Wall Street’s belief in a V-shaped recovery. iShares Dow Jones U.S. Home Construction Index (NYSEArca: ITB) is trading flat this morning.

Inflation figures were also a bit of a surprise to the markets. U.S. inflation accelerated in October as energy prices rose again and car prices rose at the fastest pace since the early 1980s, reports Rex Nutting for MarketWatch. The consumer price index (CPI) rose a seasonally adjusted 0.3% in October, while the core CPI rate, which excludes food and energy, rose by 0.2%.

Meanwhile, gold hit another fresh record high – near $1150 an ounce – in trading today. Another dip in the value of the U.S. dollar added to momentum buying as prices broke through key technical resistance levels, says Jan Harvey for Reuters. The gold market is being underpinned by fresh interest in gold from central banks after a recent major bullion purchase from India and smaller purchases by the central banks of Sri Lanka and Mauritius. The SPDR Gold Shares Trust ETF (NYSE: GLD) is currently trading up by a half percent at $112.50 a share. (For more stories on gold, see our gold category).

In an interesting development, Goldman Sachs (NYSE: GS) is attempting to spruce up their image and generate some goodwill in this holiday season. Goldman is trying a new tack to improve its public image, writes Graham Bowley for The New York Times. The company is apologizing for past mistakes and sharing some of its riches. It will spend $500 million to help thousands of small businesses recover from the recession. (For more stories on the financial sector, visit our financial category).

Tony D’Altorio contributed to this article.

The markets were mainly lifted by a pledge from the Group of 20 to keep their stimulus measures in place. Traders saw the announcement as a signal the interest rates would stay low for the time being, report Ieva M. Augstums and Tim Paradis for the Associated Press.

Tropical Storm Ida is making its way through the Gulf of Mexico, and oil companies have begun evacuating their workers. The storm was downgraded from a Category 1 earlier today, says Chris Kahn for the Associated Press. The path would put the storm east of New Orleans and away from most oil and gas facilities in the Gulf, but companies want to be prepared if things change. Oil fields in the Gulf make up about 25% of U.S. crude production and 15% of natural gas production.

Oil prices are hovering around $80 a barrel this morning on concerns about Ida as well as a weaker dollar. United States Oil (NYSEArca: USO) is up nearly 3% this morning.

The weakness of the dollar sent gold prices to a new record trading high of $1,109.90. It continues last week’s rally, when gold gained 5% on speculation that central banks would begin buying more of it as an alternative to the dollar. SPDR Gold Shares (NYSEArca: GLD) is up about 1% this morning.

Cadbury (NYSE: CBY) has rejected the latest bid from Kraft Foods (NYSE: KFT). The hostile bid of $16.4 billion was turned down after Kraft refused to improve its last offer. PowerShares Dynamic Food & Beverage (NYSEArca: PBJ) is up about 1% this morning.

Investors were driven into gold’s safe arms by a disappointing unemployment report that was the country’s worst in 26 years. (The unemployment report).

Allen Sykora for The Wall Street Journal reports that December gold peaked at $1,101.90 an ounce, a fresh record for a most-active contract on Comex. December gold eventually settled at $1,097.70 an ounce, while silver was up 11 cents to $17.52. (Can gold ETFs and prices go higher?)

Who’s going to drive gold prices? Although gold is typically driven by economic factors, these days  investors and traders are in the driver’s seat. Many analysts expect the uptrend to stick around for the time being. Eric Lam for Financial Post reports that the seasonal impact that drives gold is also a factor, as September to December has guided gold higher over the past decade. (Gold’s use as an inflation hedge).

Before investing in gold or other commodities, be sure you have a stop loss in place that you can execute when the trend winds down. (How to employ a stop loss).

For more stories about gold, visit our gold category.

• SPDR Gold Shares (NYSEArca: GLD): up 23.7% year-to-date

• PowerShares DB Gold (NYSEArca: DGL): up 21.9% year-to-date

• iShares COMEX Gold (NYSEArca: IAU): up 23.5% year-to-date

• ETFS Physical Swiss Gold (NYSEArca: SGOL): up 7.3% since inception

The 10.2% unemployment figure is far worse than what economists had expected, and they don’t see any sign of relief until next year. While the pace of layoffs has slowed, the unemployment rate is continuing to climb, reports Javier C. Hernandez for The New York Times.

Unemployment isn’t just as issue here, either; millions around the world don’t expect to see relief in the form of jobs anytime soon. The European Union forecast unemployment in the eurozone to rise to 10.7% in 2010, up from 9.5% this year. Unemployment ranges from 3.5% in the Netherlands to 18.3% in Spain, reports Greg Keller for the Associated Press. In China, the official urban unemployment rate is 4.3% in the third quarter. Brazil’s unemployment was 8.1% in August, almost unchanged from the previous month.

Gold futures have soared to a record $1,100 an ounce today. While some profit-taking briefly sent gold lower, it resumed its course and analysts expect it to continue to move higher, reports Allen Sykora for The Wall Street Journal. SPDR Gold Shares (NYSEArca: GLD) is up about 0.4% year-to-date. (More on gold can be found here).

Businesses slashed inventories for a record 13th straight month in September, although sales rose for the sixth consecutive time. Many hope that improving sales figures will encourage businesses to start lifting production, although a rising jobless rate heightens fears that consumers won’t start spending anytime soon, reports Martin Crutsinger for the Associated Press. (An ETF to play holiday shopping).

The world’s largest insurer, AIG (NYSE: AIG) reported that it was profitable for the second consecutive quarter. Although things have stabilized, the company’s CEO said that earnings will remain choppy while they restructure.  SPDR KBW Insurance (NYSEArca: KIE) is up about 0.6% this morning.

G20 Finance Ministers are meeting this week to discuss financial reform and economic recovery. While these economies have put in place certain policies in order to push along a recovery, they’re not policies anyone wants to keep in place forever. The general consensus is that it’s too soon to reverse the measures, but it’s not too soon to begin talking about when and how it would happen. Government debt in developed G20 countries is likely to reach 118% of annual national income in 2014, reports Andrew Walker for the BBC.

For more stories on the global economy, visit our global ETF page.

The Central Bank will keep rates unchanged, but the widening yield spreads between mortgage-backed securities (MBS) and federal agency debt against Treasuries may be an essential factor in determining the Fed’s stance on the direction of interest rates, reports Julie Haviv for Reuters. The Fed will buy $1.25 trillion allotted for its MBS program by the end of the first quarter of 2010. (ETFs to shelter against a weak dollar).

Purchase programs have inflated some securities to the point that investors are beginning to turn to the risk/reward of alternative spread products like corporate bonds. For instance, the yield spread on the 30-year Fannie Mae 4.5% current coupon stood at 1.47% over the 5- and 10-year Treasury blend, says Arthur Frank, director and head of MBS research at Deutsche Bank Securities.

The Fed’s decision ultimately could keep the dollar weak for the time being. To capitalize on continued weakness in our currency, consider some of the following ETFs:

• PowerShares DB U.S. Dollar Bearish (NYSEArca: UDN). UDN is up 7.2% year-to-date. This ETF seeks to reflect the performance of the short side of U.S. dollar – basically, the dollar goes down the fund goes up. (More on UDN and a weaker dollar).

• CurrencyShares Euro Trust (NYSEArca: FXE). FXE is up 5.4% year-to-date. A straight forex play on the appreciating euro. As the dollar depreciates against the euro, the euro gains in strength. FXE tries to reflect those gains. (More on FXE and the euro)

• iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM). EEM is up 54.1 % year-to-date. By holding non-dollar-denominated assets, such as emerging market equities, investors  can hedge against weakness. Emerging market investments get the benefit of the “dollar kicker” since assets denominated in foreign currencies are eventually converted back to weaker U.S. dollars. (More on EEM and emerging markets).

• iShares S&P GSCI Commodity-Indexed Trust (NYSEArca: GSG). GSG is up 12.5% for the year. This fund, like other commodity funds, can be a weak dollar hedge. GSG owns futures for 24 different commodities. (More on GSG and commodities).

• SPDR Gold Shares (NYSEArca: GLD). GLD is up 23.1% year-to-date. Gold is another weak dollar hedge because it’s considered a store of value. The current high supply of the dollar in the economy can result in high inflation and many investors have turned to gold as a way to protect against inflation. (More on GLD and gold).

For full disclosure, Tom Lydon’s clients own shares of EEM and GLD.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

Max Chen contributed to this article.

What’s driving gold prices today isn’t necessarily what drove them 40 or 100 years ago.

• Today, wealth preservation is the key driver for gold investment. Investors want to protect their assets, and gold holds its value, reports Eric Lam for the National Post.
• For most of the last decade, gold has performed well between September and December. Some investors may be considering these seasonal factors.
• The International Monetary Fund (IMF) sold 403 tonnes in September, and rumor has it that China is interested in it.
• India is also stepping up its gold holdings to 558 tonnes, up from 358 tonnes, as it seeks to diversify away from the U.S. dollar.
• In an attempt to revitalize the U.S. economy, the federal government has turned to printing massive amounts of money. The dollar has lost ground against its counterpart currencies, which has led many to believe that inflation is on the horizon.  As we all know, a good hedge against inflation is gold. (Other ways to hedge against inflation).
• Supply is becoming constrained. Of the world’s three biggest gold producers (China, Australia and South Africa), only China has increased production.

What’s the appeal of gold for the average investor? Lakshmi Iyer of Kotak Mahindra Mutual Funds states:

• Gold offers diversity, liquidity, safety and security to investors.
• Gold reduces the risk of losing money in the event that a preferred asset underperforms or when a specific sector is not doing well. (How to utilize precious metals).

For more stories on gold, visit our gold category.

Gaining access to gold is easy  through the use of the following ETFs:

• SPDR Gold Trust (NYSEArca: GLD): up 20.2% year-to-date

• iShares COMEX Gold Trust (NYSEArca: IAU): up 20% year-to-date

• PowerShares DB Gold Fund (NYSEArca: DGL): up 18.4% year-to-date

• ETFS Physical Swiss Gold Shares (NYSEArca: SGOL): up 7.1% since its inception

For full disclosure, Tom Lydon’s clients own shares of GLD.

Kevin Grewal contributed to this article.

The efforts of the U.S. government to salvage the economy has led to a deflation of the U.S. dollar. Gary Gordon for ETF Expert says that any investor must consider going forward that there are ways to hedge against inflationary pressures that stem directly from less valuable dollars in circulation.

When it comes to reasonable-risk returns to overcome inflation/dollar devaluation, Gordon notes the appeal of precious metals, thanks to their relatively lower risk. SPDR Gold Shares (NYSEArca: GLD) carries a risk grade of 76, compared to the S&P 500 which gets a grade of 83.

Even though gold is around $1,000 per ounce, and the other precious metals may look enticing, there are still reasons to like gold. (Is gold overheated?)

That being said, don’t forget about silver, which is outperforming gold these days. iShares Silver Trust (NYSEArca: SLV) is up 43.8% year-t0-date. (Why silver is outperforming).

No rally’s continuance is guaranteed. Watch the trend lines and have an exit strategy for when gold decides it’s done. (How to follow trends).

For more stories about precious metals, visit our precious metals category.

The Dow Jones Industrial Average finally crossed a milestone 10,000 points this month. Though the mark was greeted with cheers on the trading floor, it didn’t stay there for long, and ultimately closed the month below 10,000 and ended the month flat. The S&P 500 lost 2% and the Nasdaq fell 3.6%.

October was largely a month that saw a weakening dollar. This was to the benefit of commodity ETFs, including SPDR Gold Shares (NYSE: GLD), which gained 3.7% for the month. United States Oil (NYSEArca: USO) gained 8.6%.

Earnings season was a largely encouraging one. The number of better-than-expected reports outnumbered the worse-than-expected ones by a ratio of about 6:1. But there are still big concerns about consumers: spending dropped 0.5% in September. As long as consumers aren’t spending, the recovery could be long and difficult.

To view our full performance report, click here.

For full disclosure, Tom Lydon’s clients own shares of GLD.

As the commodity market sets up to appeal to investors, there are certain areas of the market to focus in on.

According to Lee Lowell for Investment U, these are three areas poised to move:

Gold. Gold is one area that has not disappointed. Gold has regained the elusive $1,000 per ounce and has motored to all-time highs of more than $1,060 per ounce. The U.S. dollar remains weak, giving weight to the argument that gold still has some shine left yet. Some analysts are even calling for the $2,000 per ounce mark. (What you can do if there’s a bubble).

• SPDR Gold Shares (NYSEArca: GLD): up 16.4% year-to-date

Silver. Silver has rallied back to the $18 per ounce area – a new high for the year, but still $4 per ounce below its all-time high of $22 from February 2008. That being said, it has handily outperformed gold this year. If gold continues to move, silver should follow. Because the silver market is smaller than gold’s, it can be volatile, so watch the trend lines and pay attention to the 200-day moving average. (Can silver benefit from inflationary pressures?)

• iShares Silver Trust (NYSEArca: SLV): up 41.6% year-to-date

The colder winter months lie ahead, making the case for natural gas stronger. Natural gas has finally moved off the lows it has logged since the highs of 2008. After bottoming in price just a few weeks ago, natural gas has rallied back up to levels last seen in early August. Bulls and bears are duking it out, though: the large amount of reserves in natural gas are re-enforcing the bears case for a pullback in this commodity. Bulls think winter will eat up those reserves. (A tale of two natural gas ETFs).

• United States Natural Gas (NYSEArca: UNG): down 55.3% year-to-date

For more stories about commodities, visit our commodity ETF category.

For disclosure, Tom Lydon’s clients own shares of GLD.