Updated from 10:16 a.m. ET with settlement prices and commentsNEW YORK ( TheStreet) -- Gold prices were popping on Thursday as traders bought the yellow metal against a massive selloff in Japanese stocks and other global equity markets. Gold for June delivery at the COMEX division of the CME climbed $24.40 to settle at $1,391.80 an ounce. The gold price traded as high as $1,397.10 and as low as $1,355 an ounce, while the spot price was up $21.80, according to Kitco's gold index. The Nikkei 225 in Japan plummeted 7.3%, its steepest drop since the aftermath of the tsunami and nuclear disaster in March 2011, as investors feared an unexpected drop by Chinese manufacturing into contraction coupled with hints that the Federal Reserve may scale back its monetary stimulus Silver prices for July delivery added 4 cents to close at $22.51 an ounce, while the U.S. dollar index was dropping 0.69% to $83.70. Fed Chairman Ben Bernanke's testimony Wednesday on Capitol Hill initially boosted gold as the central bank chief said current quantitative easing efforts should continue, but the mood quickly soured when minutes of the policy-making wing said a number of members would consider scaling back stimulus by June. Thursday's pop in prices showed a flight to safety after sentiment shifted again overnight on Japan's tumble, which spread to Europe and the United States, according to Ole Hansen, head of commodities strategy at Saxo Bank. "I think the feeling on the market is at the moment -- considering how there's been almost like a one-way street for equities over the last few months -- will this just be a couple of days blip and then the buyers will return?" Hansen said in a phone interview from Copenhagen. Chinese manufacturing PMI flash for May printed at 49.6, which was down from the prior reading at 50.5. Any number below 50 suggests a contraction in the sector. The dip in manufacturing activity in China could pose a difficult play for the yellow metal as many traders view the country's central bank purchases of gold as a positive sign, said Yoni Jacobs, chief investment strategist at Chart Prophet. Jacobs said gold attracts a lot of investors because of China's considerable purchases of the yellow metal, but also as a hedge against macroeconomic uncertainties.
"You can't really have both: it's either the Chinese investors are buying gold and the economy is good, but right now the economy doesn't look that good in China," Jacobs said in an interview. "The question is, are there going to be Chinese buyers of gold?" A major shift in gold prices could next occur in mid-June when the Fed releases it's next policy-making statement. That statement will emerged June 19, when the central bank will also issue its U.S. economic projections and when Chairman Bernanke will hold his next press conference. "Gold's going to stay in a technical trading zone right now," said Jonathan Rose, chief executive of Capital Gold Group. "The volumes of gold being traded is definitely down." Gold mining stocks were mostly higher on Thursday. Shares of Kinross Gold ( KGC) rose 3%, while shares of Yamana Gold ( AUY) increased 1%. Among volume leaders, Market Vectors Gold Miners ETF ( GDX) lifted 0.72%. Gold ETF SPDR Gold Trust ( GLD) added 2% to $134.63 a share, while iShares Gold Trust ( IAU) tacked on 2% to $13.53 a share. -- Written by Joe Deaux in New York. >Contact by Email. Follow @JoeDeaux