Gold Rebounds on Dollar, CIT News

NEW YORK (TheStreet) -- Gold prices were rebounding as the precious metal looks to the U.S. dollar for direction.

Gold delivery for December was rising $16.10 to $1,056.50 an ounce at the Comex division of the New York Mercantile Exchange. The contract has traded as low as $1,042.20 and as high as $1,063.40. Gold prices are holding above the critical $1,025 support level, which if breached, could push the precious metal below $1,000.

Silver prices were popping 24 cents to $16.50 while copper remained relatively unchanged at $2.94.

Gold futures erased last week's losses as the U.S. Dollar Index slipped to $76.24 on increased investor risk appetite. Gold prices were galvanized by "short-covering above the $1049.50 21-day moving average chart point, the weekend's CIT (CIT Quote) failure news echoes, and by news that Chinese industrial activity rose at the fastest pace in a year and a half," says Jon Nadler, senior analyst for Kitco.com in his daily metals commentary.

Some analysts don't expect this strength in gold to continue. David Morgan, founder of Silver-Investor.com, is waiting for a broader market correction and a dollar rally which would put short term pressure on gold.

"I think the dollar could break through this down channel and actually show some more strength on a very short-term basis ... I wouldn't be surprised to see a big down day in the equities market," he says.

Mining stocks were popping after China's better-than-expected manufacturing numbers. Barrick Gold(ABX Quote) was rising 0.4% to $36.06. TheStreet.com ratings team downgraded the stock to hold from buy after the company reported a $5.4 billion loss in the third-quarter.