NEW YORK ( TheStreet ) -- Gold prices extended last week's gains as investors fled into the safe haven assets after a spate of weak global economic news.

Gold for August delivery added $7.60 to $1,549.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,557.60 and as low as $1,542.10 while the spot gold price was up $4.60, according to Kitco's gold index. Gold retreated from intra-day highs as some investors took advantage of higher prices to take profits.

Silver prices fell 84 cents to $35.69 an ounce as global industrial demand worries dragged on the metal. The U.S. dollar index was adding 1.07% at $75.99 and the euro was tanking 1.81% against the dollar.

Gold prices added onto their 4% gain from last week as a rush to safety hit markets. The lackluster jobs number in the U.S. on Friday, Greek debt issues with speculation growing that Greece might be allowed to default on some of its bonds, Italian banks getting slammed on Italy's own debt problems and the hotly anticipated meeting at the White House Sunday between Democratic and Republican leaders yielding no results on the debt ceiling are all adding up to make gold a safe place to put cash.

"Gold open interest grew 12,000 contracts," says George Gero, senior vice president at RBC Capital Markets, which illustrates positions held overnight. "International funds added to positions, but the surprise is that they added to December 2011 contract."

This flight to safety is also helping the U.S. dollar resulting in the rarity where the currency and gold move in tandem.

"I think this is going to last for a while," says Imaru Casanova, equity research analyst at MLV & Co. This rally is "not ending anytime soon ... I think there is more room for gold than silver." Casanova sees gold above $1,600 in 2011, which will help silver, but the $50 still seems lofty.

Casanova thinks investors have only gotten a taste of the bad headlines in Europe, which would be good for gold even if the dollar rallies on a weaker euro. As Commerzbank pointed out in a morning note "the gold price - on a euro basis - is trading at an all-time high."

Gold was also embracing the higher than expected inflation reading from China. The government said prices in June rose 6.4% from 5.5% in May. Even if more rate hikes come as a result, there have been three so far this year, Casanova says just the acknowledgement of high inflation will push investors into gold, "investors will go to gold for protection."

Traders might have already started the rush. In the latest commitment of traders report ending July 5th speculative long positions in gold sank by 6,000 contracts whiles short positions grew by 2,000 contracts. However, since then the gold price has rallied 4%. "The sharp price rise in recent days indicates that speculative financial investors have recently increased their bets on rising prices," argues Commerzbank.

Silver traders increased their speculative long positions by a handful and decreased their short positions by over 2,000 contracts.

Gold mining stocks were torn between a lower stock market and higher gold prices, a trend which might continue. Kinross Gold ( KGC - Get Report) was down 2% at $16.33 while Yamana Gold ( AUY - Get Report) was flat at $12.42. Other gold stocks, Agnico-Eagle ( AEM - Get Report) and Eldorado Gold ( EGO - Get Report)were trading at $62.06 and $15.75, respectively.

Casanova thinks that gold stocks represent the real buying opportunity. " Equities are cheap but sometimes get caught in the overall equity selloff. You have to cover losses from other markets and you will see these stocks caught in that" Casanova thinks if gold prices take off then equities will catch up.

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-- Written by Alix Steel in New York.

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