Gold Prices Rebound After Selloff

Gold prices were rallying Wednesday, shaking off Tuesday's selloff as bargain hunters jumped into the market.

Gold for April delivery was adding $4.50 to $1,397.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has moved through the $1,400 level, a psychologically important level for investors, and traded as high as $1,406.60. The spot gold price was adding $3.60, according to Kitco's gold index.

Silver prices were also participating in the relief rally, up 34 cents to $34.46 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 T3Live.com. "I think at some point it's going to make new highs this year and it's something you should have."

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.

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.