NEW YORK (

TheStreet

) --

Gold

and

silver prices

closed mixed Monday on a stronger dollar.

Gold for June delivery added $6.50 to close at $1,515.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,519 on strong overnight buying but then turned lower to hit a low of $1,503.70. The spot gold price was adding $3.20, according to Kitco's gold index.

Silver prices lost 18 cents to settle at $34.89 an ounce. The U.S. dollar index was popping 0.94% to $76.15 as the euro tanked as much as 1% against the dollar. Although in euro terms, gold prices were rising 0.96%.

Vote: How High Will Silver Prices Go in 2011?

Gold prices eked out a gain Monday despite a strong dollar as investors opted for the safe haven asset in light of ballooning sovereign debt worries out of the eurozone. Although silver ended in the red, it was able to close off session lows.

Standard & Poor's

slashed Italy's sovereign debt rating from stable to negative while the ruling socialist party lost big in Spain to the conservative party. Although the Spanish Prime Minister said he would stay in power, the election underscores the economic frailty of the country and loss of investor confidence in the Eurozone as a whole.

Fitch

downgraded Belguim's outlook to negative from stable in mid-day trading.

If history repeats itself, gold could find some support. In fact, its strength in the face of a big dollar rally might cheer some bulls.

The first quarter of 2010 saw the rumblings of problems in Greece during which gold fell 0.33% and the

CurrencyShares Euro Trust

(FXE) - Get Report

, which tracks the euro, fell 6.35%. In the second quarter of 2010, Greece's debt was downgraded and the country received a bailout package. Gold rallied 11.43% while the FXE tanked 10.07%. So far in the second quarter of this year, gold is up 5.25% and the FXE is down 0.44%. If the euro has more room to fall, gold might have more room to rally.

Throwing a wrench into any silver rally Monday was preliminary reports that manufacturing activity in China, Germany and the EU slowed in May. Investors have become increasingly concerned with a hard landing in China, where the government constricts the money supply to fight inflation to such an extent that it stunts growth. Sixty percent of mined silver is used for industrial purposes.

Craig Weynand, chief operating officer of NuWave Investment Management, is pessimistic on short term gold and silver prices, saying that all commodities have been in a bubble for some time now.

"Going forward longer term for commodity prices, we think that prices will generally continue higher," he said. "But in the short term there will be corrective activity." Weynand says markets are entering a soft patch that will weaken commodities and give investors less impetus to buy gold and silver as an inflation hedge.

Vote: Where will gold prices finish in 2011?

Weynard is anticipating a 10% correction in stocks and commodities, a much more conservative estimate than Mark Arbeter, chief technical strategist at Standard & Poor's, who is calling for a 20% correction in the S&P.

"I think the dollar put in an intermediate, if not longer term, bottom," says Arbeter, explaining his primary reason for being so bearish on commodities and stocks. "We saw extreme bearish sentiment ... when the dollar was around the $72, $73 level. We've rallied very quickly up to the $75 and change level. While we might pull back, I don't see a retest of the recent lows." Gold and silver tend to do well when the dollar is weak, as the dollar backed commodities become cheaper to buy in other currencies and as the metals become an attractive alternative to paper money.

Gold mining stocks

were lower Monday following equities rather than their underlying commodity.

Kinross Gold

(KGC) - Get Report

was down 1.47% to $14.72 while

Yamana Gold

(AUY) - Get Report

was losing 0.75% at $11.98. Other gold stocks,

Agnico-Eagle

(AEM) - Get Report

and

Eldorado Gold

(EGO) - Get Report

were trading at $62.20 and $15.51, respectively.

--

Written by Alix Steel in

New York.

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Alix Steel

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.