The latest rush to gold is providing plenty of market buzz even on the quietest days. AP Wednesday was a good example. The metal rose to $1,141.20 an ounce, after swinging between $1,136 and a new high of $1,153.40. As gold tallied its eighth record session this month, stocks were treading water, with the Dow losing 11 to 10,424 and the S&P 500 giving up less than a point to 1109. The Nasdaq was down 10 at 2193. The dollar was weaker, and many commodities edged higher. Gold was helped by the weaker dollar but also drew buyers after the higher than expected CPI reading triggered inflation concerns. Another factor taking gold higher was news that influential hedge fund manger John Paulson is launching a new gold fund, including $250 million of his own money. "I think what we're seeing is gold is surprising most people in the market. It's rising faster than the dollar is falling, so it's got its own drivers now," said Rebecca Patterson, head of global foreign exchange and commodities at J.P. Morgan Private Bank. "I think for the next 12 months, it could go higher. What makes me nervous, for one, is valuation. It's hard to pinpoint a fair value for the price of gold...Gold certainly feels expensive here," she said. "It's a crowded trade and it seems to be an expensive trade so it's more vulnerable to profit taking. I think it goes up but it's not going to go up in a straight line." This week's purchase of gold by Mauritius and the recent purchase by India has fueled speculation that other central banks will also be buyers. Patterson said she is bullish on gold from a demand perspective, but she is warning investors to hedge their purchases with options strategies or structured products. RELATED LINKS More Central Banks to Buy Gold From IMF Gold to Hit $1,400 This Year: CEO Gold ETF's Lustrous 5th Anniversary More Central Banks Buy Gold From IMF Commodities Snapshot "There's a perception; whether it's right or wrong, in the market that central banks are moving and they are nervous not only about the value of the dollar, but other currencies as well, and they're using gold to diversify and protect the value of their reserves," Patterson said. "The investment demand has been extremely strong for different reasons over the last year. Anytime there's a little dip on the price, there are people who are happy to get in," she said. She said there are two factors that could eventually act to derail the gold rush. One would be higher interest rates, and the other would be if the dollar were to strengthen, but not as a safe haven play because gold would rise as well. Thursday's Wild Cards On Thursday, several key economic reports could influence markets. Weekly jobless claims are reported at 8:30 a.m. and are expected to be about even with last week at 504,000 new claims. Leading economic indicators are reported at 10 a.m., as is the Philadelphia Fed Survey. There are a few earnings reports, including from Sears, before the opening bell. and Treasury Secretary Timothy Geithner testifies before the joint economic committee on regulatory reform and other topics, starting at 10 a.m. Investors will also continue to watch the progress of the Senate health care bill which could face a test vote this week. Ellen Beeson Zentner, senior U.S. economist at Bank of Tokyo-Mitsubishi, said she expects jobless claims to come in below consensus, at 488,000, which would be the first time under 500,000 in months. Traders say a number below 500,000 would have a positive psychological impact on stocks. Claims could be affected by the Veteran's Day holiday last week. "Typically, when there's a a holiday during the week .. if the unemployment offices are closed, usually claims always fall in that week," she said. Zentner said she expects leading indicators at 0.2 percent. "Basically if the leading indicator data comes in at our expectation, it would actually be pretty consistent with the fourth quarter data that shows the U.S.economy is holding onto those third quarter gains," she said. What Else to Watch In addition to Sears, several other retailers report Thursday. Ross Stores and Williams-Sonoma report before the bell, and Foot Locker and Gap report after the bell. Dell reports earnings after the bell as well. All will be watched closely with particular interest in their comments about the current quarter and expected consumer behavior during the holiday season. Milton Ezrati, Lord Abbett senior economist and market strategist, said retail sales this holiday season could be a make or break factor for the stock market. He said he believes the holiday season will outpace the 1 to 2 percent improvement many analysts are forecasting. "I would be surprised if it fell short of 3.5 to 4 percent," he said. But if sales are worse than expected, watch out. "What we're looking for is moderate growth in the consumer sector. If the consumer fails us, there will be talk of a double dip in the economy," he said, adding that would take drive the stock market lower.

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