NEW YORK ( TheStreet) -- Gold prices were soaring Tuesday as the metal's safe haven appeal returned.

Gold for April delivery was rising $17.80 to $1,123.20 an ounce at the Comex division of the New York Mercantile Exchange. Prices have traded as high as $1,128.10 and as low as $1,108.10 Tuesday. The U.S. dollar index was slipping 0.49% to $79.85. Gold's spot price was rising $16.50 according to Kitco's gold index.

Silver Will Beat Gold

Investors were buying gold as an alternative investment as they sought the safety of a hard asset over struggling currencies. Details are still scarce over the EU's multibillion-euro bailout for Greece, but Spain is now at risk for losing its triple-A credit rating from Moody's along with the U.S., U.K., France and Germany. With the precedent being set that no member of the eurozone will be allowed to default, many analysts are anticipating further euro debasement and subsequent inflation.

Already in 2010 the euro has sunk 4% against the dollar, according to Joe Manimbo, currency trader market analyst at Travelex Global Business Payments. The percentage loss has been mainly due to Greece and its fiscal crisis.

Nicole Gelinas, senior fellow at Manhattan Institute for Policy Research, argues that at some point the stronger states won't be able to handle the debt burden "and then you see inflating your way out of it. Instead of individual default you have one big default through inflation."

"Given the scale of background concerns, including EU debt, fiscal deficits, U.S. credit ratings and inflation sentiment ... the precious metals complex seems set to remain volatile," says James Moore, analyst at thebulliondesk.com in his daily metals report. "Encouragingly, gold has held above $1,100 an ounce, and we expect dips ... to find further scaled down buying interest."

Although further currency debasement could help support higher gold prices, global rate hikes might provide some short-term downside. After China's higher-than-expected inflation reading, analysts are expecting the government to raise interest rates to control economic expansion.

The Federal Open Market Committee voted to keep rates stay low at zero to 0.25%. The Fed reiterated its pledge to keep rates low for an extended time despite fledgling economic recovery. However, investors are continuing to look for signs that the Fed will tighten rates sooner than expected. Gold historically is bought by investors as a hedge against inflation, and any signs that governments will end the flow of free money will weigh on prices.

Silver prices were popping 23 cents to $17.34 while copper was up 4 cents to $3.36.

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Mining stocks, a more leveraged way to invest in gold, were popping. Barrick Gold ( ABX) was adding 2.44% to $39.97 while Newmont Mining ( NEM) was trading up 3.06% to $51.25. Kinross Gold ( KGC) was rising 2.95% to $18.15 after the company officially announced its purchase of Underworld Resources ( UW). This will give Kinross the White Gold project, which has an estimated 1.5 million ounces of resources in the Yukon Territory. Shares of Goldcorp ( GG) were up 2.23% to $39.96.

Freeport McMoRan Copper & Gold ( FCX) and AngloGold Ashanti ( AU) were trading at $82.09 and $38.26, respectively.

Shares of the popular physically backed ETF, SPDR Gold Shares ( GLD), were higher by 1.56% to $110.05.

-- 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.