below $1,100 briefly Thursday as the U.S. dollar rallied, but prices rebounded somewhat to settle at $1,107 an ounce. Gold could continue to correct through the end of the year as investors take profits and the U.S. dollar rallies. "We went so far so fast once we broke the $1,000 level", argues David Morgan, founder of Silver-Investor.com. "You might see it come down to the $1080 level, that's probably as low as it will go."
Another factor that could hurt gold prices in the short term is a tightening of liquidity from the Federal Reserve. The
Fed said in its last FOMC meeting
that most of its special liquidity facilities will expire February 1st, 2010. Morgan says "that is going to put a pretty big squeeze at least on a short term basis for the dollar to the upside" which will weigh on gold. But long term fundamentals are still intact. Many bullish analysts believe that too many dollars have been injected into the markets which will make gold and silver the only financial assets that aren't liabilities.
was stronger at $78.06 and mixed against the Euro. Gold delivery for February was rising 40 cents to $1,107.80 at the Comex division of the New York Mercantile Exchange. Prices have traded as high as $1,111.60 and as low as $1,097.70.
were up 14 cents to $17.34 while copper was flat at $3.11.
Mining stocks, a more leveraged but riskier way to
, were rising with broader equities.
, two large cap miners, were rising slightly to $38.80 and $48.32 respectively. Shares of
Freeport McMoRan Copper & Gold
were rising 1.20% to $77.05 while
was up 1.15% to $11.55.
SPDR Gold Shares
were rising 1% to $108.50.
The mining ETFs,
Market Vectors Gold Miners
Market Vector Juniors
were higher at $45.75 and $24.95 respectively.
Written by Alix Steel in New York