Gold which has been gaining all time highs driven up by record high oil prices, steep declines in the dollar and worries about a US recession, fell sharply to record a high of $968.60 an ounce after crude oil retreated and traders cashed in profits.

Crude oil offers a hedge against a falling dollar as most commodities bought and sold in dollars are more attractive to foreign investors when the dollar is falling. This pushed oil to a new record of almost $104 which in turn fell back as traders booked profits. Today oil prices gained back slightly to record a high of $100.19 a barrel after opening's today's session at $99.88 a barrel.

The dollar continues to be under pressure after US Feds Chairman Bernanke called for vigorous action by mortgage lenders to avoid foreclosures. The comments sparked the appeal for gold prices as fears of stagflation continue to spook the market. Yet profit taking is the main reason for the decline we see today in gold prices.