Gold Higher on Greek Hedge Appeal (Update 1)

Updated from 1:31 p.m. ET with settlement price.

NEW YORK (TheStreet) -- Gold prices rose Thursday, thanks to the yellow metal's appeal a hedge for investors ahead of general elections in Greece this weekend.

Gold for August delivery settled up 2 cents at $1,619.60 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,629 and as low as $1,610.40 an ounce during the session, while the spot price was up $2.50, according to Kitco.com.

"Everybody's kind of hedging, it's a 'just in case,' because this rally could be over very quickly," said George Gero, financial consultant at RBC Wealth Management. "This is not a long-term investment for the eurozone people, this is essentially a hedge against the upcoming election; there's some hedging going on because you have an OPEC meeting upcoming."

Silver settled down 53 cents at $28.41 an ounce, while the U.S. dollar index was down 0.17% at $82.

Central banks looking to diversify recently had been big buyers of gold, but Gero said individual investors are buying Thursday ahead of the Greek elections.

A number of new buyers could be from Greece, where investors may be taking out euros from the banks and putting those funds into gold so as to avoid a potential 40% currency devaluation that could occur if the country dropped out of the eurozone and returned to the drachma.

The U.S. dollar is also losing some appeal, according to Adrian Day, president of Adrian Day Asset Management, as economic data has softened of late and the likelihood of the Federal Reserve providing more stimulus grows.

"The dollar has just become less attractive to people, even though the Euro is no more attractive, nor is the Yen ... nor is the British pound," said Day. "So gold becomes the alternative at that point."

Thursday's jobless claims rose 6,000 to 386,000, which likely added to increased speculation that the Federal Reserve would act on some sort of monetary easing.

Day said that people are buying gold because they expect "easier money" around the world -- in the form of action by the United States Fed and the European Central Bank -- and that there is almost no probability of tightening in any major economy.

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