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By Kishori Krishnan Exclusive To Gold Investing News

The price of gold has touched an all-time high for a third consecutive day - after a continued decline in the dollar kept it attractive to investors.

Gold reached $1,058 an ounce on Thursday, powering past Wednesday’s high of $1,048.4. On Tuesday, it passed the $1,033.9 an ounce record set in March last year.

Top miners Barrick Gold (TSE:ABX) in Toronto and Newmont Mining (TSE:NMC) in New York rose 4 per cent and 7 per cent respectively on Wednesday, while small players such as Eldorado Gold (AMEX:EGO), up 10 per cent, fared even better.

The S&P/TSX global gold index, which tracks mid to large-sized gold miners in several markets, rose 5.3 per cent, as analysts predicted the breach of its previous record suggested a continued run.

Analysts maintain that there was still potential for prices to rise further if the dollar remained weak.

Gold bulls see runaway inflation and US dollar weakness sparking the latest stampede into the metal. Gold equities are still about 10 per cent below their record levels - as measured by the TSX gold index.

But, is it a mere speculative bubble waiting to burst? Or is the US dollar intending to hitch a northward ride on the back of rising gold prices, as was predicted at the start of the year?

Reasons a-plenty

Historically, it has been noticed that there has been an inverse relation between the price of gold and the United States (US) dollar, the global reserve currency.

Whenever the dollar has moved up, the price of gold has dropped, and vise versa.

But of late, say around 14 months ago, this relationship has seen a change, one which has got the money markets analysts as well as global bankers and economists in a tizzy, sparking off a new debate.

Coming just at the start of the global recession, it has been observed that the price of gold and the US dollar have moved in tandem. The trend was mapped between January-March 2009, and was expected to repeat itself towards the end of this year.

Bang on. On September 7, gold bucked the inverse trend with the dollar, when both had traded on the up.

Wither from here?

Will gold and the USD find a common purpose and move together? On the face of it, it does not look like the analysts predictions of gold and USD going up together will happen by 2009-end or even the next year.

There are several reasons for this: The dollar continues to weaken globally post recession, and there is already talk of it being replaced as the global currency. Gold, on the other hand, continues to rise in the international market.

Also, even at such high levels, there haven’t been any reports of redemptions from exchange-traded funds (ETFs) which implies that people are holding on to their gold, hoping for a further rise in prices.

Sharing his perspective on where the asset class is headed, Commodity Guru Jim Rogers told India’s business channel, CNBC/TV18 that gold would touch higher levels over the next decade.

His advice - don’t buy gold at such highs, but also do not sell your existing stock because gold is expected to go even higher in the next decade.