NEW YORK ( TheStreet) -- Gold prices gained steam Tuesday as a higher-than-expected inflation reading in the United Kingdom prompted a rush into the metal.

Gold for February delivery added $7.70 to $1,368.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,376 and as low as $1,356.80 during Tuesday's session. The spot gold price was giving up some of its gains and was rising only $4.10, according to Kitco's gold index.

The U.S. dollar index was slipping 0.46% to $79.03 while the euro added 0.55% to $1.33 vs. the dollar. The euro was stronger on hopes that the eurozone would expand its bailout fund. Although any big steps wouldn't be seen for months, the optimism of a stronger, more permanent solution was buoying the currency.

Also helping the euro was Greece's ability to raise €650 million in short- term funding without an interest rate increase. Germany reported in a study that investor confidence jumped as the country continues to grow its export business. A less wobbly euro puts pressure on the dollar and helps support gold prices.

"Gold is stronger ... boosted by bargain-hunting in Asia overnight," says William Adams, head of research at fastmarkets.com. "The weaker dollar is also helping."

Gold prices tanked 2% on Friday. The gold exchange-traded fund, SPDR Gold Shares ( GLD), lost almost 6 tons as investors dumped their holdings. Big price dips have often triggered physical buying from more price sensitive markets like China and India. China begins its New Year festivities when the Year of the Rabbit kicks off Feb. 3 and consumers are buying gold ahead the celebration.

George Gero, senior vice president at RBC Capital Markets, says that hedge funds are also repurchasing previously sold positions, "open interest is at 590,000, a gain of 5,000 contracts over the week previous," which points to more longs in the market.

"These healthy corrections which gold experiences every few months provides it with the strength to reverse and make further gains," says Jeb Handwerger, editor at GoldStockTrades.com, who is waiting for the selloff to finish shaking out before adding more positions.

Meantime, easy ways to provide gold to consumers continue to crop up Bloomberg reported gold vending machines will arrive in Tokyo as protection against fiat currencies. The move follows other areas like Dubai and Florida which are installing or have installed similar machines. Although this probably won't move the needle on physical demand for gold products, it does serve as a vehicle for introducing gold to the masses.

Despite gold's 10-year rally and mass media coverage, most investors and average people don't own gold. In fact, they might be more apt to sell gold at high prices rather than buy it. Legendary investor Jim Rogers told me recently at an event with 300 major international money managers that 76% of them had never owned gold.

"I was stunned, so was the moderator, so was everybody, stunned at how few people actually had ever owned gold, so it's still an under-owned asset," he said.

A gold frenzy needs everyone owning the metal for bubble worries to materialize. Gold vending machines could be the beginning.

The higher-than-expected inflation reading out of the U.K. was a driver for Tuesday's action. Last week, the country reported a producer price reading of 2.9% but said Tuesday that consumer prices jumped 3.7% year-over-year in December. The Bank of England has said that inflation could move higher in the short term but that it expects it to slow to its target level of around 2%.

One worry is that increased inflation may lead to an interest rate hike but more analysts are actually predicting more stimuli out of the U.K., not less.

Silver prices closed up 59 cents to $28.91 while copper added 1 cent at $4.42.

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Gold mining stocks, a risky but potentially lucrative way to buy gold, were mixed. Kinross Gold ( KGC) was flat at $16.79 while Iamgold ( IAG) was adding 3.67% at $18.06. The company reported fourth quarter gold production of more than 310,000 ounces. For the full year, Iamgold produced almost 1 million ounces at average cash costs of $565-$585. The miner projects 1.1-1.2 million ounces for 2011.

Other gold stocks New Gold ( NGD) and Gold Fields ( GFI) were trading at $8.53 and $16.84, respectively.

-- Written by Alix Steel in New York.

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