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Gold's record-setting rally could slow down if Congress raises the U.S. debt ceiling, as expected.

Tom Grill | Iconica | Getty Images

But any selling on that news would likely be temporary, as there are plenty of other concerns to support gold at this level, as well as an increase in speculative buyers.

Gold on the Comex jumped above $1,600 an ounce for the first time Monday, a psychologically important level that may also provide motivation for those looking to sell gold jewelry and coins.

"I'm just a cautious bull. When we get a break through on the debt ceiling issue, I would expect a pullback," said Jim Steel, chief commodities analyst at HSBC.

"I'm not saying the rally is going to end. We're really very fixed on the debt negotiations, the debt ceiling talks, events in Greece, inflation in China, food prices. There are a lot of things that argue for the market to go higher, and I think it will go higher, but you also have to mention that it is a market and it has a lot of things balancing it," he said.

His target for gold this year is an average $1,525, and he thinks the current price has a ways to go—towards $1,650 or even higher.

New worries about contagion in Europe have kept the sovereign debt problems at the forefront for investors, as they also watch the political jockeying in Washington toward a resolution on the debt ceiling ahead of the Aug. 2 deadline.

Stocks tanked Monday on worries about Europe and its banks, and the negative sentiment spilled over to U.S. financial shares. Investors also sold oil, copper, and agricultural commodities, but they bought Treasurys and the precious metals—gold and silver.

Gold is also at record levels in euros and sterling.

Barclays analyst Suki Cooper said one key to watch is investor sentiment, and right now it's very positive.

"Speculative positions have seen their largest weekly increase since September, 2009," said Cooper.

The Commodities Futures Trading Commission reported that large funds, including hedge funds, in the week ending Tuesday increased their net long positions by 25 percent.

"The macro environment certainly looks like it's going to be supportive of prices in the near term," she said, also noting there could be a pull back if the debt ceiling limit is raised.

Markets have become more anxious about the idea that the U.S. could default should Congress not end its bickering over budget cuts and taxes, clearing the way for a vote to lift the debt ceiling. Rating agencies have warned they would downgrade the U.S. triple-A rating, if the ceiling is not raised.

Gold's very move above $1,600 could help restrain the rally because it could affect demand.

"What we would be concerned about at that level is how would the jewelry market react, particularly abroad," Steel said. "What we're seeing now is a slowing of physical demand based on price, in China and India, in emerging markets in general, and we're also seeing some increase in scrap metal that's been refined and put back in the system."

Cooper agrees that sales of jewelry and coins by households and others could start to impact prices. She had expected a surge of selling at $1,500, but that did not materialize so now she is watching the psychological $1,600 level.

"I think it's going to be the scrap supply that really sets the tone," she said. Despite the remarkable run in gold lately, Cramer on Monday said it's not too late to own the precious metal. The "Mad Money" host offered four reasons as to why gold is still worth buying now.

First, gold stocks aren't flying, even though the price of gold [GLCV1  Unavailable      ()   ] is on a tear. All gold stocks are off their highs and many are down for the year, Cramer said. Agnico-Eagle [AEM  65.71    0.66  (+1.01%)   ], for example, is down 14 percent for the year. Barrick Gold [ABX  49.03    0.72  (+1.49%)   ] is down by 7 percent despite its superior options and NovaGold Resources [NG  10.49    0.46  (+4.59%)   ] is down by 26 percent, even though it has excellent Canadian assets.

Second, gold has historically represented roughly 5 percent of the average portfolio, yet the average portfolio today has just 1.5 percent exposure to gold.

Third, the move in gold is a total rebuke of the governments worldwide, Cramer said. The U.S. dollar [.DXY  75.38    -0.10  (-0.14%)   ] is often called the reserve currency and is still the acknowledged security around the world. For some time, the European countries got together to use a common currency by way of the euro [EUR=X  1.4109    0.001  (+0.07%)   ]. But now, Cramer said neither currency is worth owning.

"What we need to do is have our currency be replaced by a different currency, the currency of gold, which is now recognized around the globe as something that no government can be debase," Cramer said.

Fourth, the technicals also indicate that gold should continue to climb, Cramer said. John Roque, a highly regarded technician on Wall Street, confirmed his findings. His charts call for a near-term target of $1,700.

So what's the trade?

If you want to own gold, Cramer said you can either open an account with a broker and buy the physical metal. Bullion is the actual brick or slices of gold, but only very wealthy investors should consider buying it because it needs to be stored in a depository bank. The other option is to buy the SPDR Gold Shares [GLD  156.57    1.37  (+0.88%)   ] exchange-traded fund, which Cramer said is the best way to go.

But any selling on that news would likely be temporary, as there are plenty of other concerns to support gold at this level, as well as an increase in speculative buyers?

A. TRUE
B. FALSE 

If you want to own gold, Cramer said you can either open an account with a broker and buy the physical metal. Bullion is the actual brick or slices of gold?

A. TRUE
B. FALSE