NEW YORK (CNNMoney.com) -- Gold prices have taken a dive this week as investors rekindle their faith in the stock market and the almighty dollar.
"There are a lot of people throwing in the towel as gold moved below $1,100 for the second day running," said Adam Klopfenstein, senior market strategist at commodities brokerage firm Lind-Waldock. "I do think the bull case for gold is going to be on hold for the rest of the year."
Gold slipped below the $1,100-an-ounce benchmark on Monday, falling more than $15 to close at 1,095.40 per troy ounce, as the Dow moved in the opposite direction, jumping 0.8%. The yellow metal continued its decline during Tuesday's session, falling $9.30 to settle at $1,086.70 and ounce, as the Dow rallied.
Gone are the heady days of early December. The price of gold has steadily tumbled since peaking on Dec. 3 at $1,218.30 per troy ounce, a record when adjusted for inflation.
Jon Nadler, senior analyst with Kitco Metals Inc. in Montreal, said that gold had been riding a "bubble" of "hot air," with some of the more fearful investors suggesting that the dollar might be replaced by the barter system.
"Don't get carried away with scenarios of 'Mad Max'," said Nadler, referring to a film set in the apocalyptic near future.
Meanwhile, the dollar has been on the upswing, reclaiming its international status as "the currency of choice on the risk aversion side," said Klopfenstein of Lind-Waldock.
"People are starting to see the dollar rally and that's been a big catalyst for bringing gold off its high," he said.
Going forward, Klopfenstein expects gold to rise again in 2010 on a weakening dollar. He believes that Federal Reserve Chairman Ben Bernanke won't be able to raise the federal fund rate fast enough to control inflation, and that as a student of the Great Depression, he will favor keeping the economy stable over capping inflation.
The price of gold reached its true record nearly 30 years ago, as measured in dollars adjusted for inflation. Gold peaked on Jan. 21, 1980, at $825.50 an ounce, in 1980 dollars. That translates to an all-time record of $2,163.62 an ounce in 2009 dollars.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.02%||4.09%|
|15 yr fixed||3.19%||3.25%|
|30 yr refi||4.04%||4.09%|
|15 yr refi||3.24%||3.25%|
Today's featured rates:
Boom Aerospace has the green to take the first phase of its supersonic airline plans into the blue. More
President Trump says Obamacare is exploding, so it's up to him to make changes to it to keep it afloat for 2018 and beyond. More
In a company-wide email on Friday, Hampton Creek CEO Josh Tetrick wrote that both the SEC and the Department of Justice have closed their inquires into the company's so-called mayo-buyback scheme. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
A PwC report estimates that 38% of U.S. jobs are at a high risk of being replaced by robots and artificial intelligence over the next 15 years. More