NEW YORK ( TheStreet ) -- Gold prices popped higher Tuesday, shaking off a two day decline that left the metal down 2%. Gold for April delivery rose $23.50 to close at $1,748.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,750.30 and as low as $1,712.60 an ounce while the spot price was adding $28, according to Kitco's gold index. Silver prices closed 44 cents higher at $34.19 an ounce while the U.S. dollar index was down 0.63% at $78.59.
A weaker U.S. dollar helped the gold price climb higher Tuesday. Gold first found support from a stronger euro, which got a boost after Greece raised 812.5 million euros over 6 months at slightly lower yields. The euro was also up on hopes that the Greek government could agree on austerity measures needed to secure a second bailout. Reportedly a plan is waiting to be signed by leadership. The optimism, despite a 24-hour strike in the country protesting 15,000 jobs cuts, was helping to boost gold. Federal Reserve chairman, Ben Bernanke, also did his part to weigh on the dollar. In his testimony before the Senate Budget Committee, he still warned of a fiscal crisis despite recent good U.S. economic data. Bernanke focused on how far the labor market had to go to be in a full recovery mode, which basically seemed to reiterate the Fed's decision to leave interest rates low for an extended period of time. His commitment to a weak dollar policy helped gold. "
I think dollar weakness is the excuse," says George Gero, senior vice president at RBC Capital Markets, when discussing gold's rally today. "The Greek leaders meeting tomorrow may have good outcome moving the euro over 1.32" vs the dollar, which would also provide some short term support for the yellow metal. Gold had been digesting the big 5.5% move prices had after the Federal Reserve announced low interest rates until the end of 2014. "I think the breakout we saw a couple of weeks ago is still holding up," says Stan Dash, vice president of applied technical analysis at TradeStation, who is monitoring $1,709 an ounce as a key support level. A close under $1,709 would signify a more dramatic selloff, "then I think you have to be more serious about a retest of $1,675 an ounce."
"October and November import figures were much higher than usual and the December figures reflect a reversion to the mean," Holmes. "On the year, gold imports from Hong Kong were up over 250 percent from 2010, that doesn't sound like a slowdown in demand." According to HSBC, dealers in China said that jewelry demand grew 10%-20% during the lunar New Year, steeply down from the 30% growth rate in 2010. "The weak consumer demand is seen as a byproduct of uncertainty over global growth," wrote James Steel, analyst at HSBC, in a recent note. Holmes, on the flip side, said figures were stronger than that "the Beijing Municipal Commission of Commerce reported last week that sales of precious metals jumped nearly 50% from the same time last year during China's week-long New Year's holiday in January." With the International Monetary Fund warning of slower Chinese growth this year, Chinese gold demand remains a dicey support for higher gold prices. If China's trade surplus narrows, the government could possible crack down on gold imports as a way to curb the inequity. "Barring any changes to China's monetary policy, renewed eurozone weakness may impact China's growth, which may curb demand for gold jewelry," says Steel. 'Barring any changes' is the key part of that statement, however, as any signs of significant growth slowing could trigger monetary easing, which is good for gold as people look for a safe place to store wealth. Gold mining stocks were struggling Tuesday. Kinross Gold ( KGC) was down slightly at $11.11 while Randold Resources ( GOLD) was 2.66% lower at $114.87. Other gold stocks, Agnico-Eagle ( AEM) and Eldorado Gold ( EGO) were trading lower at $36.41 and $14.58, respectively. -- Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel.