Gold futures on the COMEX rose $21.20, or 2%, to $1,105 per ounce, buoying all investments tied to the gold price, including gold ETFs and gold stocks. The Market Vectors Gold Mining ETF (GDX) and SPDR Gold Trust (GLD) rallied 5.45% and 2.3%, respectively. The rise in gold futures came on the back of a weaker U.S. dollar, which helped to fuel the largest single-day gain for the price of gold and gold mining stocks in 2010. The U.S. dollar Index (DXY) fell 0.34% to 79.19 one trading day after reaching its highest level in six months.

Today’s advance in gold came as a welcome respite after the 11.8% drop in the price of gold following its all-time high print of $1,226.50 per ounce in early December. Gold stocks followed the gold price higher and received an added boost from a drop in risk aversion on Wall Street. The 5.45% gain in the GDX was its strongest in two months - and comes after a severe decline of 26.5% from its high print in early December. Canada’s S&P/TSX Global Gold Index, the most widely followed basket of gold stocks in Canada, rose 5.1% to $315.65 as Canadian-based gold producers benefited from the gains in the price of gold.

Several individual gold stocks displayed their enhanced leverage to the gold price by outperforming the gold mining ETF. One notable example was the 8.7% rally in shares of Golden Star Resources (GSS), which announced positive exploration results at its Benso concession in Ghana. GSS posted its largest one-day rise since December 1, 2009. Golden Star’s discovery of additional gold ounces serves to partially alleviate some industry analysts’ concerns regarding the gold mining company’s ability to extend mine life, and could lead to the continued narrowing of the valuation gap that exists between shares of Golden Star relative to its peer group.

Lending additional support to the rally in gold price and gold mining stocks was positive commentary from Fred Hickey, the editor of the widely followed High-Tech Strategist. In the most recent edition of Barron’s 2010 Roundtable, Hickey offered his bullish view on the gold price, silver price, gold stocks, and silver stocks. Due in part to the ongoing money printing by the Federal Reserve and foreign central banks, the gold price has advanced in each of the prior nine years - and Hickey contends that the price of gold will continue to rise over the next several years. In an effort to profit from a continuation of the gold bull market, he highlighted his large position in the SPDR Gold Shares (GLD) and gold bullion.

Furthermore, because the Federal Reserve and Chairman Ben Bernanke have continued to print money at such alarming levels, Hickey stated that he is no longer short selling, and instead is concentrating on building long positions in gold stocks for the upcoming “crazy” portion of the gold bull market. Gold stocks have considerably underperformed the price of gold during the past two years, and he noted that in most gold bull markets gold stocks will outpace the gold price by a factor of 2-to-1 at a minimum. As for individual gold mining companies, Hickey recommended AngloGold Ashanti (AU) and Newmont Mining (NEM). He pointed to Newmont’s development in 2010 of the largest gold mine in Australia - which will add almost 20% to the gold mining company’s gold production. In addition, the share price of Newmont Mining is near the same level as in 2003 - when the gold price traded between roughly $350 and $400 per ounce - leading Hickey to describe it as a “very cheap stock.”

For those investors who would prefer exposure to a basket of gold mining stocks, Hickey recommended two gold ETFs - the Market Vectors Gold Mining ETF (GDX) and the Market Vectors Junior Gold Mining ETF (GDXJ). Moreover, the GDX and GDXJ also provide exposure to the silver price, which he highlighted as being undervalued relative to the gold price, noting that “silver typically does well in the later stages of a bull market in precious metals.” In terms of specific silver mining companies, Hickey pointed to silver stocks Hecla Mining (HL) and Silver Standard Resources (SSRI).

It remains to be seen if today’s strong performance in the gold futures and gold stocks ends the recent downtrend in the gold sector, or is just a reflex rally to work off the oversold condition. As the week progresses, investors will continue to monitor news coming out of Greece and other European countries with sovereign debt issues, as well as Friday’s employment report, for clues as to future direction of the U.S. dollar, gold price, and gold mining stocks.