NEW YORK (TheStreet) -- Profit taking, a strengthening U.S. dollar and low volume pressure gold prices lower.

Gold dipped

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.

The

U.S. dollar index

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.

Silver prices

were up 14 cents to $17.34 while copper was flat at $3.11.

Mining stocks, a more leveraged but riskier way to

invest in gold

, were rising with broader equities.

Barrick Gold

(ABX)

and

Newmont Mining

(NEM) - Get Report

, two large cap miners, were rising slightly to $38.80 and $48.32 respectively. Shares of

Freeport McMoRan Copper & Gold

TheStreet Recommends

(FCX) - Get Report

were rising 1.20% to $77.05 while

Yamana Gold

(AUY) - Get Report

was up 1.15% to $11.55.

Shares of

SPDR Gold Shares

(GLD) - Get Report

were rising 1% to $108.50.

The mining ETFs,

Market Vectors Gold Miners

(GDX) - Get Report

and

Market Vector Juniors

(GDXJ) - Get Report

were higher at $45.75 and $24.95 respectively.

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Written by Alix Steel in New York

.