Gold Prices Head Higher

NEW YORK (TheStreet ) -- Gold prices were rising Friday as the U.S. dollar weakened.

Gold for April delivery was rising $8.40 to $1,116.90 an ounce at the Comex division of the New York Mercantile Exchange. Prices have traded as high as $1,119.50 and as low as $1,104.60. The U.S. dollar index was slipping 0.45% to $80.38.

Gold prices were trading solidly above $1,100 after better-than-expected economic data from Asia and Europe increased investors' risk appetite. The U.S. Commerce Department also reported that the economy grew at a 5.9% pace in the fourth quarter. Although many analysts don't expect this pace to continue, the news provided moderate support for markets and commodities.

Gold could see some more short-term downside as Greek sovereign debt fears dominate market sentiment and the euro. Despite the euro's relief rally on Friday, any further weakness will support the U.S. dollar and weigh on gold prices. India also reportedly raised its import taxes on gold, silver and platinum to offset higher precious metal prices. Jewelry demand in India, historically the largest consumer of gold, was down 19% in 2009. Higher taxes could weaken demand even further.

One variable continues to be who will buy the IMF's 191.3 tons of gold. FinMarket news agency of Russia had reported that China will buy the remaining tons. Although this report has been discredited by Reuters, the rumor was enough to move gold up over $10 on Thursday.

"I don't think the market is going to collapse if somebody announces ... that the story is not true because physical demand was there [for gold] even before the news," says Peter Grandich, chief commentator on Agoracom.com. "It may stop it from rising more sharply or faster, but the trend is still up in gold ... The physical market particularly the market that trades overseas ... has been very strong."

Silver prices were rising 36 cents to $16.50 while copper was up 7 cents to $3.28.

Mining stocks, a more leveraged way to invest in gold, were mixed. Barrick Gold (ABX) was up slightly at $37.72 while Newmont Mining (NEM) was rising 0.14% to $49.09. Other large- cap miners Kinross Gold (KGC) and Goldcorp (GG) were slightly higher to $18.14 and $37.80, respectively.

Shares of Freeport McMoRan Copper & Gold (FCX) were adding 1.23% to $74.96, while Yamana Gold (AUY) was rising 0.19% to $10.52.

Shares of the popular physically backed ETF, SPDR Gold Shares (GLD) were up 0.91% to $109.30.

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--Written by Alix Steel in New York.

Alix joined TheStreet.com TV in February 2007. Previously, she held positions in film and theater production, management, and legal administration. Alix has a degree in communications and theater from Northwestern University.