Spot gold prices rose against the US Dollar as New York opened today as Washington announced the slowest quarterly GDP growth in four years.

Gold rose to $678 per ounce just ahead of the London PM Fix after trading flat throughout the Asian and early European sessions.

Against Sterling and Euros, however, gold was little changed.

The overnight market in Asia was slow ahead of a 3-day holiday in Japan and then a week's shutdown in China starting on Tuesday.

"I think sentiments remain positive," said one Hong Kong dealer. "What happened in this market is just a correction." (For the longer-term technical outlook, click here...)

Gold had risen for seven weeks running before dropping 1.7% during the first half of London trade Thursday.

Frantic short-covering on US Dollars was reported in the currency markets as the greenback pushed the Pound Sterling below $1.9900 for the first time in 5 days. The Euro slipped to $1.3590, but it leapt again on Friday's GDP numbers, back above $1.3680.

"I wouldn't be surprised if we saw some short-term bounce in the gold price, given the sharp decline we saw last night," reckons David Moore of the Commonwealth Bank of Australia.

"I was surprised by how much gold fell in response to a relatively modest recovery of the US Dollar against the Euro.

"It showed there has been some disappointment that gold didn't go above $700 an ounce. Some investors may have become impatient as a result of that." (To learn how the gold market has changed since bottoming at $260 six years ago, click here...)

Other gold analysts point to Thursday's fresh all-time highs in the Dow Jones Industrial Average, which continued to rise above 13,000.

"With the US Dollar being as weak as it has been we are finding that international investors are starting to see excellent value in US equities over gold," reports Jonathan Barratt, managing director of Commodity Broking Services in Sydney.

"I think the Dollar strength and the strength in the Dow in the last few days have actually pushed aside the metals," agrees Joseph Guzzardi of Sabin Commodities, a Comex floor trader.

"You see more money going into the stock market. And with the Dollar being up, plus [Thursday's] option expiration, it put a little pressure on the metals."

A new high in the Dow, however, shouldn't be misread as a new boom in US stock values, notes John Authers in the Financial Times.

"Ultimately, a landmark for the Dow signifies little or nothing," he writes, because "it is weighted by share price, not market value – so the biggest companies do not have the biggest impact."

Authers notes that fully one third of the Dow's most recent 1,000-point rise came from gains in just four companies – Altria, Boeing, Honeywell and ExxonMobil.

The broader S&P index, by comparison, remains shy of beating its spring 2000 top.

And looking ahead, institutional investors might come to wonder if switching a portion of their gold holdings into US stocks is really such a wise move.

For the facts about how gold and stocks interact beyond one day's noise in the markets, click here now...