Gold prices surged more than 3% Monday, topping $1,300 an ounce for the first time in a month.
Prices of the precious metal were boosted by a weaker U.S. dollar, which declined against most global currencies, including the euro, the pound and the Japanese yen. Commodities such as gold are priced in the dollar and gain ground when the U.S. currency declines.
Gold prices had been falling until recently, as the dollar gained strength amid worries that the Federal Reserve would scale back its bond buying program sooner rather than later. In fact, prices plunged more than 20% between early May and late June.
But the Fed and chairman Ben Bernanke have been taking steps recently to soften their stance and reassure investors that monetary policy will remain "highly accommodative" for the foreseeable future. Worries that the Fed's program will undermine the dollar and spur higher inflation have resumed, pushing investors back into gold as a hedge against inflation.
Gold prices are also moving higher thanks to a "big short-covering rally," said analysts at Lido Isle Investors, meaning that traders who had previously placed short positions on gold futures (bets on a price decline) are now buying to cover those bets.
Other precious metal prices also gained traction, with silver prices gaining more than 5%. Copper and platinum futures rose about 1%.
Gold miner stocks were also big winners Monday, helping boost the broader market. Newmont Mining (NEM) shares surged more than, making the stock the best performer in the S&P 500. Freeport-McMoran Copper & Gold (FCX) shares rose more than 2%.
With stocks back in record territory, investors are getting greedy again.
CNNMoney's Fear & Greed Index shot back into Greed mode Thursday for the first time since late May, as the Dow and S&P 500 rallied above their record closing highs from May, and the Nasdaq climbed to its highest level since October 2000.
The return of the bull comes as investors have started feeling more confident about future policy decisions from MOREHibah Yousuf - Jul 11, 2013 2:42 PM ET
Gold prices were hit hard in the global market rout that followed Ben Bernanke's latest press conference.
Gold futures fell 6.4% to settle at $1,285.9 an ounce -- its lowest level since September 2010.
The drop extended an ongoing sell-off in the precious metal as investors prepare for an end of the Federal Reserve's stimulus policies, which Bernanke said could begin later this year and culminate in 2014.
Of course, he also said MOREBen Rooney - Jun 20, 2013 2:53 PM ET
The recent ups and downs in the stock market may be frustrating, but one strategist said the break in the rally is also creating an attractive entry point for investors who remained on the sidelines during the first few months of the year.
"The market has been up, but a majority of investors have not participated," said Nathan Rowader, director of investments and senior market strategist at Forward Management, an investment MOREHibah Yousuf - Jun 14, 2013 10:31 AM ET
Everything comes at a cost, including the Fed's low rate policy and multiple rounds of monetary easing.
Not one to pass up a good musical reference, noted bond guru and Pimco managing director Bill Gross' latest missive is aptly titled "Money for Nothin' Writing checks for free" in a nod to Dire Straits. In the past, Gross has cited The Beatles and Flavor Flav in pieces.
In his first investment outlook MORECatherine Tymkiw - Jan 3, 2013 1:46 PM ET
The Federal Reserve is opening its wallet even wider with its latest round of quantitative easing. But this time around, the Fed is expanding its purchases of agency mortgage-backed securities as opposed to just buying more Treasury bonds.
So that begs the question: What the heck are agency mortgage-backed securities?
These bonds are backed by cash flows from mortgages guaranteed by the likes of Fannie Mae and Freddie Mac (remember them?) as MOREMaureen Farrell - Sep 13, 2012 4:55 PM ET
|Media show range of emotions after Trump presser|
|'All manner of stupid came out': Late night responds to Trump's press conference|
|Daniel Craig confirms return as James Bond|
|Six business leaders have quit Trump. Who's next?|
|Trump vs. Amazon: So much for the businessman president|