NEW YORK (Reuters) - As gold surged to an all-time high above $1,040 per ounce on Tuesday, opinion is mixed over whether bullion will continue to rise or pull back sharply.

Investors have piled into the metal to preserve the value of their dollar-denominated assets against erosion by a weakening dollar and inflation due to economic uncertainty.

Seeking safe havens, they have poured money into the popular gold-backed exchange-traded funds (ETFs) and other gold-related assets. Gold ETFs held nearly 1,300 tons of bullion -- more than half of the annual mine production.

On the other hand, the weight of near-record long positions in the New York gold futures leaves the market vulnerable to a correction. Analysts had called for a correction but bullion kept rising.

In the past 18 months, gold has corrected sharply each time it rose toward $1,000 an ounce as a resurgent dollar put a damper on the metal’s rise.

Is gold’s record high sustainable in the uncharted territory against the backdrop of the unprecedented global economic stimulus plan?

Four analysts weighed in:

BUY

AXEL MERK, PORTFOLIO MANAGER OF MERK MUTUAL FUNDS, PALO ALTO, CALIFORNIA

“I don’t think it (gold rally) is overdone at all. It’s going to be over when the policy makers come to their senses, and the chance of that happening is very low.

“Right now, policy makers think it’s good to debase the dollar. They just don’t know what they are wishing for. The idea that it’s good to destroy purchasing power, and somehow you can depreciate yourself into wealth is something that is cruel and naive.

“I wouldn’t mind if the metal pulls back -- I would buy some more. Of course it may happen, but I am not concerned about a pullback.”

TOM DI GALOMA, HEAD OF FIXED INCOME RATES TRADING, GUGGENHEIM PARTNERS, NEW YORK

“I think gold’s rise over the near term has been a function of a Fed that continues to provide massive liquidity to the marketplace. This could find itself in a bad way in the future.

“Gold is hedge against a Fed providing too much liquidity to the market. If we do get inflation, it will do well. If we get deflation, it will do well.

“It’s confirming that the rally in Treasuries in the past month may be forming a bubble. Gold is predicting higher interest rates will come home to roost. Once the Fed stops its QE (quantitative easing) program, it will have an effect on inflation.”

SELL

ASHRAF LAIDI, CHIEF MARKETS STRATEGIST AT CMC MARKETS, LONDON

“We don’t think this is going to be the big move that is going to take us toward that target $1,200. We think we’re going to have to come back down to an area between $970 and $960, and then really recover and regain the $1,050, and really could go toward $1,150 as early...the end of this quarter.

“I would actually see the floor around $970 and there is a chance we could drop back below that when we see a retreat to risk appetite and risk aversion as we enter into this earnings season.”

PRADEEP UNNI, TRADER AT RICHCOMM GLOBAL SERVICES, DUBAI

“Though the dollar weakness factor is behind the rapid move in gold, charts look extremely strained at the moment, and they are hinting at a correction. Any extended gains may trigger profit-taking provided that investment demand continues to protect extended correction.

“Physical markets are most likely to stay calm at such high prices, and this may trigger a correction as there is a steady drop in demand.”