NEW YORK ( TheStreet ) -- Gold prices rallied Wednesday, shaking off Tuesday's selloff as bargain hunters jumped into the market.

Gold for April delivery added $3.30 to close at $1,396.10 an ounce at the Comex division of the New York Mercantile Exchange. Although the gold price settled under $1,400 an ounce, a psychologically important level for investors, and has traded as high as $1,406.60. The spot gold price was relatively flat, according to Kitco's gold index.

Silver prices participated in the relief rally, settled up 35 cents to $34.47 an ounce. Silver also saw nearly a 5% selloff Tuesday but still held above the $33.50 level. Silver is appealing to investors not only for its safe haven status but also for its use as an industrial metal, which will be pivotal to rebuilding Japan.

All told, gold prices tanked 2.25% Tuesday as Japanese investors frantically sold gold for cash. The selloff brought bargain hunters into the market who started picking up the metal around $1,380 an ounce and have pushed the metal past the $1,400 level.

"I still think there is still room to get in on gold," says Scott Redler, chief strategic officer for "I think at some point it's going to make new highs this year and it's something you should have." Redler trades the SPDR Gold Shares ( GLD), which has shed 5 tons in the last week.

Safe haven buying is coming back into the market after Bahrain declare martial law in the country and three more people died as protesters clashed with police. Iran condemned the military support of other Arab nations including Saudi Arabia, which has now sent 1,000 troops into the region.

Oil prices have rallied as a result, bringing precious metal prices with them as the two have traded in tandem during this recent crisis in the Middle East-North Africa region.

The bank of Japan also pumped more money into its economy, bringing the three day total to 55.6 trillion yen, or $688 billion. More paper money in any economy highlights gold as a safer alternative paper currency.

Bad news is still coming out of the Eurozone with Moody's downgrading Portugal's long term credit rating with a negative outlook citing low growth, questioning its ability to implement its debt reduction program and its capacity to borrow money without huge interest payments.

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