NEW YORK (TheStreet) -- Gold prices, which had steadily climbed to new highs, breaking through the $1,200 level last week, took a precipitous dive Friday to close out the first week of December.
The plunge -- on the New York Mercantile Exchange's Comdex, the most actively traded contract, gold for February delivery, lost $48.80 to settle at $1,169.50 an ounce on Friday -- is very much of the zeitgeist. Better-than-expected jobs data released on Friday by the Labor Department made economic recovery seem more realistic, and this in turn eased the doomsday-scenario worries that have, in some part, fueled the historic rise in gold prices this year.
Many gold hawks see the government's massive economic-stimulus spending as little more than a money-printing binge, which will eventually fuel hyperinflation and a devalued dollar. Certain investor gurus have, based on this logic, been making gold-bug wagers of late, including hedge funders John Paulson and Paul Tudor Jones.
But when any sign of economic health emerges from the daily economic data mill, money moves out of safe havens and into the riskier stuff. Also, the greenback strengthens, as it did on Friday, with the dollar index rising more than 1%.
Everyone, it seems, has been attempting to divine the heights gold prices might reach in 2010 -- or whether the precious metal, first used as a currency in the sixth century BC, might just run out of gas next year in the face of a possibly rebounding economy, and a lessening of inflation fears.
