Gold futures jumped by more than $14 an ounce today, sailing past $700 an ounce. The closing level of $705.20 in trading on the New York Mercantile Exchange represents its highest level since May 2006. 
What is behind this surge in gold prices? There are several factors behind the rise in the price of gold, but a couple stand out at this time. The number one factor behind the rise in the price of gold is the weakness in the US dollar. The US dollar has been extremely weak of late against the Euro, Yen, and others. The weakness in the dollar is a huge concern among many economists who see it as a very worrisome sign for both the economy and the financial markets. The dollar weakness can also be traced to numerous things such as: the trade deficit, the budget deficit, and the expectation of lower interest rates. Many see gold as the ultimate dollar hedge play.
The other major reason behind the surge in gold is the fact that it is a safe haven investment in a turbulent global economy. There is no doubt that there are many jitters in the world markets right now, and gold is viewed as a very safe investment.
Higher gold prices could signal trouble ahead for the economy for a couple of reasons. First, higher gold prices tend to predict higher inflation ahead. Second, higher gold prices generally mean that the dollar is weakening which could cause damage to the economy.
Keep an eye on the price of gold, it tends to be a pretty good indicator of the economic picture.
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