Gold Prices on the Rise

Gold prices Tuesday were rallying as bargain hunters bought the precious metal and supported the gold price.
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NEW YORK (

TheStreet

) --

Gold prices

Tuesday were rallying as a tentative U.S. dollar and better investment sentiment lifted the gold price.

Top Trend Moving Gold Prices

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Gold for June delivery was up $3.90 to $1,139.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Tuesday has traded as high as $1,146.80 and as low as $1,134. The

U.S. dollar index

was rising 0.22% to $81.10 and the euro was down 0.41% against the dollar. The spot gold price today was rising $5, according to Kitco's gold index.

The risk trade was slowing returning Tuesday as markets breathed a sigh of relief that the

Securities and Exchange Commission's

vote to bring fraud charges against

Goldman Sachs

was split three to two. Calmed traders sold out of the

U.S. dollar

and bought riskier equities and commodities, which helped gold find support around $1,135 an ounce. A slew of better than expected earnings from

Citigroup

(C) - Get Report

and

Goldman Sachs

(GS) - Get Report

as well as a potential resolution over Greece's debt crisis also helped offset jitters over Goldman's future.

According to reports, Greece is ready to agree to a bailout package from the IMF and European Union, but is waiting on an interest rate decision. Joint EU and IMF discussions will start Wednesday and an aid agreement is expected quickly. As long as interest rates are reasonable for Greece, the country will most likely accept the bailout money so it can pay off its debt and coupon payments due in May. There is strong demand for Greek bonds but at a steep price as the yield on the 10-year notes rose to 7.86%. The gold price is still heavily tied to the dollar/euro trade and any resolution to the Greek debt drama will ease the downward pressure on the euro and help gold prices.

Many analysts expected gold prices to break its all time high of $1,227 an ounce, but were unconcerned by the recent selloff. "When you're talking about something that sells for $1,100, a $10 change in price is really trivial," says J.C. Doody, editor of goldstockanalyst.com. "The real driver for the gold price is the real interest rate ... the real interest rate is barely negative ... There's just not a lot of fear at the moment on the part of investors about inflation ... Until we see some kind of change on the macro front we're not going to see too much action in gold."

The

price of silver

is up 10 cents to $17.83 while copper prices were flat at $3.50. One long term worry for base metal prices is slowing demand from China. The country has recently taken steps to curb its explosive growth after reporting a first-quarter GDP of 11.9%. China raised its banks' reserve requirements, taking money out of circulation, and recently made it harder for citizens to get a mortgage for a second home and nearly impossible to buy a third residence. Ballooning growth ignited heavy export demand for base metals and any weakness in consumption could hurt prices. It just becomes a question of by how much China's economy will slow. The average GDP in many countries is 5%-6% and many analysts believe that China won't stop growing altogether, but will just temper its expansion.

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Mining stocks, a more leveraged way to

invest in gold

, were positive.

Barrick Gold

(ABX)

was trading at $39.27 while

Newmont Mining

(NEM) - Get Report

was down slightly at $52.03.

Scotia Capital

initiated the stock with a sector perform rating and a $67 price target. Other large cap miners

Kinross Gold

(KGC) - Get Report

and

Goldcorp

(GG)

were rising slightly to $17.92 and $39.11, respectively.

Shares of

Freeport McMoRan Copper & Gold

(FCX) - Get Report

were rising 0.89% to $81.52 while

Yamana Gold

(AUY) - Get Report

was adding 1.30% to $10.14.

The popular physically backed ETF,

SPDR Gold Shares

(GLD) - Get Report

was rising 0.35% to $111.54.

>>How to Invest in Gold

>>More stories on gold investing

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Written by Alix Steel in New York

.

Alix joined TheStreet.com TV in February 2007. Previously, she held positions in film and theater production, management, and legal administration. Alix has a degree in communications and theater from Northwestern University.