Gold Prices Reach for $1,254

NEW YORK (TheStreet) -- Gold prices were gunning to break their record high Thursday as an uncertain stock market fueled demand for gold as a safe haven asset.

Gold for August delivery settled $18.20 higher at $1,248.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,252.80 and as low as $1,231. The U.S. dollar index was falling 0.55% to $85.60 while the euro was rising 0.73% to $1.239 against the dollar. The gold spot price Thursday was popping $15, according to Kitco's gold index.

Investors were selling stocks on a flurry of disappointing economic data including higher-than-expected weekly initial jobless claims and were hedging their bets with gold. Lackluster risk appetite was buoying higher prices, and momentum buying tried to push gold past its record of $1,254 an ounce.

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Gold is an attractive place for investors to put their money in uncertain times, as it's money that retains its value. The U.S. dollar has also been considered a safe haven, but as headline risks from the BP oil spill, Greece labor strikes and Spain's debt issues continue to scare traders, hard assets become more attractive than paper currencies.

For the moment, the euro is recovering after a successful $4.3 billion bond sale in Spain, which was weighing on the dollar and supporting gold prices.

However, yields on 10-year bonds were up 20% from the previous bond sale as investors remain reticent to lend the country money forcing Treasury to sweeten the pot. There are also still worries that the European Union and IMF are putting together a secret bailout for Spain although officials have denied these rumors.

Gold prices have continued to rise despite the lack of inflation data in the U.S. which indicates that its general fear and headline risk not inflation that's triggering gold's move. Wednesday's core producer price index rose 0.2% and Thursday's core consumer price rose 0.1%, both in line with expectations.

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Many analysts expect gold prices to continue their recent pattern of consolidation and recovery as a double digit price move to the upside could trigger profit taking.

"As ever in the short term, anything could happen, but given the continuing degree of sovereign risk, gold is more likely to move higher than lower," says Mark O'Byrne, executive director of GoldCore. "$1,300/oz remains possible over the summer despite the traditionally negative summer season."