Gold is outperforming the market by a large gap now. This is expected to keep up until gold potentially reaches $800/oz levels based on increasing US dollar weakness, fear driving traders in to safe assets (gold, bonds, etc) and away from stocks.
With the housing recession potentially spreading to other sensitive sectors, we see the potential for an economic slowdown being exacerbated by the ever weakening US dollar. Gold, which is a traditional safe haven in times of crisis and fear, is gaining strength. December 2007 futures are trading over $710/oz up from a low of $655/oz only several weeks ago. Traders that were short gold futures have covered or reversed positions and investors have been buying gold in large volume.
I would recommend buying gold on any weakness going in to the end of the year. We’ll see the dollar continue to weaken further, especially if the Federal Reserve cuts interest rates. This will cause traders to reprice gold higher accordingly.
Good luck trading!