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Gold Bugs Eye $600, $850 and Far Beyond

But as investors are looking for excuses to buy, a drop in the dollar might well give another leg up for gold. Should tensions with Iran ease, the greenback could get hit ahead of Friday's readings on the U.S. budget and trade deficits.

Still, after easily passing through the psychologically key $500 level in November and recovering from a mid-December slump, gold has been on a seemingly unstoppable upward trend. Most analysts currently view it as overbought. A correction, several say, should be expected soon.

This, however, is what gives Bernie Schaeffer, head of Schaeffer's Investment Research, confidence that gold still has room to run.

"This overwhelming sense of skepticism, this all-out assumption that the end of this rally is near, is exactly why the metal and its relevant stock indices still have upside potential, at least for the short term," Schaeffer wrote in a research note.

Schaeffer's contrarian investment strategy proposes that the investing masses may be right while a trend is unfolding, but they are likely wrong about when the trend begins and when it ends. "In this situation, I think the gold skeptics are calling an end to the trend a bit too early," Schaeffer says.

At the other extreme, James Turk, founder of GoldMoney.com, believes that gold might test $850 per ounce before the end of March. At a recent meeting in TheStreet.com's office, Turk said that after passing the key $500 level, gold has attracted investors who were previously under- or un-invested in the metal.

In addition, Middle Eastern investors tend to rush into gold when they are flush with cash, as they are currently, while the tensions with Iran, the ongoing war in Iraq and the recent victory of Hamas, are all fueling the short-term trend.

Several analysts, including Lundin and Peter Grandich, editor of The Grandich Letter, believe that gold will likely try to test the $600 before an expected correction occurs.

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