NEW YORK (
TheStreet ) --
Gold prices Wednesday were hitting record highs as gold's appeal as a safe haven asset exploded.
Gold for June delivery was popping $19.70 to $1,240 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,249.20 and as low as $1,227.20. The
U.S. dollar index was rising 0.44% to $84.84 while the
euro reversed earlier gains and was falling 0.38% to $1.26 against the dollar. The spot gold price Wednesday was adding $8, according to Kitco's gold index.
Gold prices finally broke their record high gold price of $1,227 on Tuesday and momentum buyers today have boosted prices to another new all time high of $1,249 an ounce.
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Investors are still digesting the European Union's $1 trillion financial aid package for struggling eurozone nations. Their lack of faith that it will be enough to stem the growing debt crisis as well as their worries in the sustainability of the euro have been driving investors to gold. While paper money, or fiat currency, comes under pressure, gold is appealing as money that retains value.
Spain's announcement that it will implement austerity measures to stem its deficit just confirmed that the country's financial situation is more serious than previously thought. This move added more fuel to the gold fire as prices hit record highs in U.S. dollars, euros, Swiss francs and sterling.
The question now facing analysts is
how high will gold go
? With gold reaching for the $1,250-an-ounce level, many investors might take profits and move into cash.
"However, the sheer scale of fiscal deficits facing numerous countries is likely to prompt further diversification from fiat currencies and should ultimately propel gold to fresh highs," says James Moore, analyst at thebulliondesk.com in his daily metals report.
Many analysts are expecting a wide range for gold prices from $1,175 to $1,275 as the profit-takers battle with the momentum-buyers and bargain-hunters. Jon Nadler, senior analyst at Kitco.com, believes once the fear premium comes out of the gold market, prices will sink to $800 an ounce.
"At what point do ETFs, hedge funds and other cyclical ... players exit the market and leave it in a more balanced situation?" Nadler forecasts a dip in gold prices within the next 10 to 20 months as European and U.S. markets stabilize.