NEW YORK (

TheStreet

) --

Gold

and silver prices rallied Tuesday on a weaker dollar and mixed inflation news out of China and the U.K.

Gold for April delivery added $9 to $1,374.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today touched a high of $1,377.50, a key resistance area, and a low of $1,361.30. The spot gold price was adding more than $11, according to Kitco's gold index.

Silver prices

climbed 16 cents to $30.69 and pushed through their $30.50 resistance area. Backwardation, where front contract months trade higher than contracts farther out, which was a bullish signal on Monday, reversed on Tuesday. As expected, silver eased off its high of the day of $30.90, but the trend remained up.

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Vote: Where will gold prices finish in 2011?

Silver "is acting a little friskier than gold," says Scott Redler, chief strategic officer for T3Live.com, "I think silver is going to remain in this range. I don't want to buy it when it's exciting, I want to buy it on support." Redler doesn't think gold or silver will see any big up moves yet.

Inflation data helped lead the precious metals higher Tuesday. The U.K. reported that January's Consumer Price Index rose 4% from 3.7% in December. China reported an inflation reading of 4.9%, higher that 4.6% for December but lower than the expected 5.4%.

The higher number in the U.K. means the central bank might be coerced into raising key interest rates, but the Bank of England has adamantly shied away from that course of action for fear of choking off growth. The country grew negative 0.5% in the fourth-quarter.

A strong reading in China will also perpetuate negative real interest rates in the country, which is currently negative 1.9%. On the flip side, because the number wasn't as hot as some analysts expected, the People's Bank of China might not be forced to raise interest rates as aggressively, something it hates doing and has done three times since October.

Gold and silver thrive in negative real interest rate environments, as the local currency is worth less and the precious metals become a more appealing place to store your wealth.

Gold has also shrugged off attempts by other countries to fight inflation, largely ignoring Sweden's 25 basis point interest rate hike Tuesday.

A weaker dollar was also helping silver and gold, with the U.S. dollar index down 0.10% to $78.52. The euro was flat at $1.34 against the dollar after Spain raised €6.17 billion for one year and 1.5 year duration, both at significantly lower interest rates.

Technical trading was also ruling the market. Silver has closed above the $30 level for five trading days in the past week, which is a very bullish signal for traders. "I think silver prices look fantastic," said Phil Streible, senior market strategist at Lind-Waldock. Silver broke through the small resistance area of $30.50, which is bringing momentum traders into the market.

As for gold, prices still have more to prove. Streible says "$1,377-$1,378 is still the upper end of the range. I think that's been a challenge for gold for a couple of weeks now and really it's going to take a close over there

for gold to really move higher." After a strong close, Streible says, gold could challenge the $1,400 level.

"Momentum traders like higher volume, higher closes, higher open interest," says George Gero, senior vice president at RBC Capital Markets.

Gold and silver bugs will also be looking to 13F filings, which were released today and highlight who and how big named investors and investment banks are trading precious metals in the fourth quarter.

The biggest news was that

JPMorgan Chase

(JPM) - Get Report

sold 4.5 million shares of gold ETFs, it dumped 1 million from the

SPDR Gold Shares

(GLD) - Get Report

and 3.5 million from the

iShares Gold Trust

(IAU) - Get Report

. The investment bank rotated more heavily into silver buying 2.4 million shares of the

iShares Silver Trust

(SLV) - Get Report

for a total of 3.6 million shares. JPMorgan does have a very small position in the

ETFS Physical Gold

(SGOL) - Get Report

of 400,748 shares.

Hedge funds run by

John Paulson

and

George Soros

are always closely watched. Paulson is still the largest holder of the GLD with 31.5 million shares, while Soros is the seventh with 4.7 million shares. The GLD is the biggest position in both of their portfolios.

This kind of loyalty to gold can give confidence to gold investors who not only want to invest like the behemoths but also want validation for their holdings.

Paulson sold a handful of shares of

AngoldGold Ashanti

(AU) - Get Report

but is still the largest shareholder. Paulson stood pat in its shares of

Gold Fields

(GFI) - Get Report

,

NovaGold

(NG) - Get Report

,

Randgold

(GOLD) - Get Report

and

Iamgold

(IAG) - Get Report

, but did sell 13.7 million shares of

Kinross Gold

(KGC) - Get Report

.

Soros was a little more active in the gold market closing out positions in several junior

gold stocks

:

Seabridge

(SA) - Get Report

,

Gammon Gold

(GRS)

, and

New Gold

(NGD) - Get Report

. Soros still owns

NovaGold

(NG) - Get Report

, unchanged at 12.91 million shares, while adding 98,500 shares of

Kinross Gold

(KGC) - Get Report

.

Gold mining stocks

, a risky but profitable way to

buy gold

, were rallying.

Barrick Gold

(ABX)

was adding 1.64% at $49.33 while

Newmont Mining

(NEM) - Get Report

was up 1.89% at $58.27.

Other large gold stocks Randgold and AngloGold Ashanti closed at $78.53 and $46.06, respectively.

--

Written by Alix Steel in New York.

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