Gold Prices Break the $2,000 Glass Ceiling as Middle-East Unrest Continues

The gold spot price in New York closed at $2,005.60 at the end of trading today, breaking through the important $2,000 level for the first time since May. Rallying from a low this month at around the $1,810 level, gold is up nearly 10% on the month. Intraday trading today peaked at $2,008.50 as the price began surging just after 12:00 PM Eastern time. Despite the strong gold rally, silver ended the week down more than 2%. The gold to silver ratio now stands at 87.

Gold's closing price today could spark a move next week to a fresh all-time high price, which is currently near the $2,050 mark set in May. Comex open interest in gold futures contracts is rising, causing the overall positioning of traders to shift from net short to net long. Perhaps the most important aspect of this rally in gold is that it is coming against the traditional inverse correlation between the gold price and interest rates and the U.S. dollar. Historically, high yields and a strong dollar spell doom for the gold price; the past week has gone completely against this trend. The geopolitical situation in Israel has no doubt contributed to this surge as tensions continue to rise. Gold spot will be something to closely watch next week.