) --

Gold prices

staged a rally, breaking an almost three-day selloff, after Ben Bernanke left the door open for more monetary easing.

Gold for December delivery added $34.10 to close at $1,797.30 an ounce at the Comex division of the New York Mercantile Exchange. The

gold price

has traded as high as $1,800 and as low as $1,759.50 while the spot gold price was adding $35.80, according to Kitco's gold index.

Silver prices

settled up 20 cents at $40.95 an ounce. The

U.S. dollar index

was down 0.57% at $73.82 while the euro was up 0.83% vs. the dollar.

Federal Reserve Chairman, Ben Bernanke, offered no surprises in his speech at Jackson Hole Friday, but he did allow the possibility for further intervention. Bernanke said the Fed is willing to step in if needed to trigger a stronger recovery, but barely discussed any monetary policy. The Fed's policy meeting in September is now two days instead of one, which indicates stimulus is on the table but whether or not there will be an agreement or policy shift is a different story.

Vote: Where will gold prices finish in 2011?

Gold prices and equity markets rallied, buoyed by expectations of another Bernanke life raft. More money in the system could trigger higher inflation, currently at 1.8% excluding food and energy, which makes gold more appealing as protection against paper currencies. Now expectations shift to the Fed meeting in September.

"It's become an annual ritual to expect Jackson Hole to be a momentous occasion in all of these markets," says Jon Nadler, senior analyst at Nadler thinks that Bernanke isn't in a position to pump more money into the system just because some macro data is disappointing and the stock market is suffering. There were also three dissenters at the last Fed meeting in early August who disagreed with keeping interest rates low until mid-2013 because of rising inflation, so printing more money seems like an even farther reach.

Nadler says that any disappointment would lead investors out of stocks and into gold, but "if it's an across the board selloff in all types of assets that were predicating their further advances on easy money, if we have a wipeout of that nature, it could be a short term across the board sell signal."

Gold prices have corrected 11% in two-and-a-half days, giving up half of its gains from its two month rally which pushed the metal to an intraday high of $1,917 an ounce. The massive selloff could also be igniting bargain hunters wanting to take advantage of "lower" gold prices.

Nadler, who warned of a 35% correction two weeks ago, still stands by that prediction which would take gold prices to $1,247 an ounce.

Many experts, however, think that gold will trend higher as the macro backdrop has not changed. European governments are still struggling with ballooning debt and trying to save Greece from imploding. Germany is now making headlines with rumors swirling about a possible short selling ban and rating downgrade, both of which were denied. With investors so headline skittish, gold is fulfilling that safe haven role.

"The debt problems in the U.S., Europe and Japan are real," says Don Dion, founder of Dion Money Management and senior contributor for


. "They will not be solved any time soon. Gold will remain a safe haven until these issues are resolved"

News that the U.S. grew only 1% in the second quarter versus the 1.3% previously reported also underscored double dip recession fears.

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Hurricane Irene is also picking up steam and starting to slam the east coast. Its path is expected to extend from North Carolina to Canada. Natural disasters or events of this kind are also another reason some investors buy gold, as a panic hedge.

Gold mining stocks

were volatile but headed higher.

Kinross Gold

(KGC) - Get Kinross Gold Corporation Report

was up 1.93% to $17.39 while

Yamana Gold

(AUY) - Get Yamana Gold Inc. Report

was adding 1.48% at $15.76. Other gold stocks,


(AEM) - Get Agnico Eagle Mines Limited Report


Eldorado Gold

(EGO) - Get Eldorado Gold Corporation Report

were trading higher at $67.80 and $19.24, respectively.

Miners were also in the spotlight Friday as Peru raised taxes on the industry by $1.1 billion, which was much less than expectations. With Hugo Chavez, president of Venezuela, nationalizing gold mines, companies in precarious parts of South America and Africa could have been met with a similar fate or much higher taxes. This certainty coming out of Peru eliminates this risk.


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.