Shares and gold up as dollar tumbles

Analysts say the 10,000 mark may be "a call to action for investors"

World stock markets remain close to 13-month highs after the Dow Jones topped the 10,000 mark on Wednesday for the first time in a year.

Twelve months ago, major banks were struggling under the weight of huge credit losses and the US administration was doing its best to rescue the financial system from imminent collapse.

In contrast, the latest rally gave a psychological boost to investors.

Wednesday's worldwide share surge was triggered by better-than-expected results from US giants Intel and JP Morgan Chase.

However, Thursday's performance was more mixed, reflecting the fact that the US economy has a long way to go before there is real recovery.

DOW JONES INDUSTRIAL AVERAGE: JAN - DEC 2009

Intel's third-quarter net income came in at $1.9bn (£1.2bn), down from the $2bn it made a year ago, but still ahead of what analysts were expecting.

JP Morgan Chase was the first big US bank to report July-to-September results.

The second-biggest US bank made a net income of $3.6bn (£2.5bn), compared with $527m in the same period of 2008.

Other key world markets have followed a strikingly similar path to the Dow in the past year.

London's FTSE and Japan's Nikkei are also on a long-term upward path:

FTSE 100 INDEX: JAN - DEC 2009

NIKKEI 225 INDEX: JAN - DEC 2009

On Thursday, Goldman Sachs and Citigroup also outpaced expectations.

Goldman Sachs' profits for the period were $3.19bn (£1.96bn), a four-fold increase from the same period in 2008.

Citigroup's profits grew as well, but the much lower figure of $101m reflected the impact of the recession on its retail banking operation.

In line with markets elsewhere, Germany's Dax index and the French Cac have taken heart from these developments:

DAX INDEX: JAN - DEC 2009

CAC 40 INDEX: JAN - DEC 2009

But while stocks have performed well recently, the US dollar has weakened. On Thursday, it hit a 14-month low against a basket of major currencies, including the euro.

The dollar is expected to remain weak as long as investors know that the Federal Reserve has no intention of increasing interest rates from their current level of between 0% and 0.25%.

Fed boss Ben Bernanke has said he will tighten monetary policy when the economy recovers.

However, while unemployment continues to rise, higher rates are not on the cards, analysts say.

UNITED STATES DOLLAR v EURO: JAN - DEC 2009

At the same time, the price of gold has recently hit record highs, although it subsequently retreated from the peak of more than $1,065 an ounce that it reached on Tuesday morning.

The weakness of the dollar has certainly helped to boost gold, as those who would typically have invested in that currency seek out other, more lucrative places to put their money.

However, gold is not quite as mighty as it seems at present.

When inflation is taken into account, gold is half the value it reached in 1980 in real terms, when it peaked at the equivalent of $2,350.

FOREX GOLD INDEX $/OZ: JAN - DEC 2009