Gold and Silver Shine Brighter

Gold has reached new levels of glitz as the dollar continues to fade.

The precious metal is rapidly approaching $1000 per ounce and is likely to hit that new level sometime this year. Gold hit a record price when it rose $7.60 to $975.10 after having traded as high as $978.50 in New York. It has risen 16% in 2008 on the top of a 32% increase in 2007.

Gold is not the only metal that has been shining more brightly of late. Silver hit its highest point in more than 25 years when it hit $19.92 an ounce before falling to $19.74 and palladium was up to a new six-year high of $582 an ounce before falling to $560.00. Platinum rose to a high of $2,161. The price of precious metals is being driven up by a weakening dollar; the U.S. currency fell .6% on Friday to $73.82 on the dollar index which measures the buck against six other currencies, as well as rising costs of gold production due to aging mines and depletion of product.

"There are a couple of drivers that are pretty important for the gold price right now, especially the U.S. dollar, it's an inverse relationship that's pretty tried and tested," said Dundee Securities analyst Mark Smith. "As the price of gold goes up, producers are able to mine lower grade materials and since the plants are fixed in size that makes production on an annual basis decline slightly."

Gold is denominated in U.S. dollars and the weakening price has driven investors to flock to the metal as a means of protesting themselves.

StreetTRACKS Gold Trust (nyse: GLD - news - people ), an exchange-traded fund that tracks the price of bullion, rose 0.2%, or 19 cents, on Friday, to $96.18. That is up from $82.46 at the end of last year and $63.21 at the close of 2006. "Inflationary pressures are something that are also playing into the market. Fundamentals are strong and I think $1,000 would not be an end. We are going to go higher from there," said Lehman Brothers analyst Michael Widmer.

The U.S. Treasury announced Monday that it supports selling some of the gold reserves held by the International Monetary Fund. The proposed gold sales could bring as much as 400 tons of gold to market. The IMF holds the third-most gold reserves in the world, behind the U.S. Federal Reserve and Germany's Bundesbank.