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NEW YORK ( TheStreet ) -- Gold and silver prices shined as safe haven assets Tuesday on a broad commodity rally and as European debt worries plagued investor sentiment. Gold for June delivery added $7.90 to $1,523.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,529 and as low as $1,513.20. The spot gold price was up $7.50, according to Kitco's gold index. Silver prices jumped $1.22 to $36.12 an ounce. The U.S. dollar index was shedding 0.38% to $75.85 which was helping the metals as they became cheaper to buy in other currencies.
European woes were front and center Tuesday. European countries have reportedly been preparing for a Greek default that would result in delayed repayments. Moody's is also threatening to downgrade the credit rating of some of the U.K.'s biggest banks.
Slowing inflation would prevent the central bank from raising interest rates, which would be good for gold, but could also diminish gold's attractiveness as a safe-haven investment. Jeff Clark, senior precious metals analyst at Casey Research, thinks that China will be forced to buy loads of gold and silver. Clark thinks that later in this decade the IMF will introduce a basket of currencies, which will become the world's official reserve currency as the value of the dollar fizzles out. "After that, it would be the yuan." Clark doesn't believe in a Chinese gold standard but does think the country will keep buying the precious metals to beef up its purchasing power and at some point will ditch dollars. "China is trying to diversify their way out ...
by buying gold and buying all their own production of gold." Clark thinks silver might hit its inflation adjusted high of $120 but that gold could actually break $5,000 an ounce. Short term, however, Clark sees more downside for gold. "The average correction for silver is 19%, gold's 12% and we've only had a 3%-4.5% correction in gold ... It could easily fall further." Silver has corrected more than 30%, above Clark's estimated average. Clark thinks the end of the bull market is at least three years out and that the "real issue is where is the bottom of the dollar." Although the dollar and gold only move inversely 32% of the time, according to Standard & Poor's, many experts believe gold's bull market since 2008 is primarily due to currency debasement, triggered when central banks printed their way out of the financial crisis, and that investors are opting for gold as protection against weakening paper money. Gold mining stocks were popping. Kinross Gold ( KGC) was up 2.43% at $15.16 while Yamana Gold ( AUY) was gaining 2.59% to $12.28. Other gold stocks, Agnico-Eagle ( AEM) and Eldorado Gold ( EGO) were trading at $63.89 and $15.84, respectively.
-- Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel. >To follow the writer on Twitter, go to http://twitter.com/adsteel.