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Gold prices

soared Thursday as the metal resumed its inverse dance to the U.S. dollar and investors bought the price dip.

Gold for December delivery jumped $16.10 to $1,353 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Thursday has traded as high as $1,359 and as low as $1,334.


U.S. dollar index

was slipping 0.50% to $78.68 while the euro was up 0.66% to $1.36 vs. the dollar. The spot gold price was popping $16, according to Kitco's gold index.

Gold prices climbed as the

dollar resumed its decline and the euro rallied

after confidence was restored in the European Union's ability to handle Ireland's debt crisis. The head of Ireland's central bank said the EU and IMF would probably lend the country tens of billions of euros to help the struggling economy.

This is a leap from the prime minister's repeated statements that Ireland's finances were in order and no bailout was needed. Ireland had been resisting any kind of aid package because of stringent oversight from the IMF. It is unclear if the bailout would be for just Irish banks or for the country as a whole.

European Central Bank, IMF and EU leaders are meeting in Ireland today to take a look at the Irish banks to see how insolvent they might be. Although the monetary outcome is unclear, Ireland's acceptance of some bailout money has calmed investors' fears of default and stemmed recent losses in the euro.

Spain also sold 30-year and 10-year bonds to solid demand as investors lent money to the country for the long term. The news reassured investors that eurozone nations might be better off than they thought.

Risk appetite returned which pushed investors into higher yielding currencies like the euro and pressured the dollar. Gold benefits when the dollar falls because the dollar-backed commodity becomes cheaper to buy in other currencies. As the dollar is also worth less, gold becomes a more attractive place to store one's wealth.

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Most analysts had expected the dollar to weaken after the Federal Reserve announced its $600 bond purchase program, but that thesis had been proven wrong of late as a weaker euro pushed the dollar higher.

Gold prices are set to remain volatile with double-digit price swings now the norm. Some gold investors are a bit skittish headed into Friday as worries persist that China might raise key interest rates. Typically China raises interest rates on the 20th of any given month, which is making investors wonder if the central bank will continue with tradition tomorrow.

What a Chinese Rate Hike Means for Gold Prices

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A rise in interest rates in China would put more pressure on gold prices and some analysts think it would be enough to retest the $1,315 and then $1,260 an ounce support area. Scott Redler, chief strategic officer for, says he needs to see where prices settle and calm down before reestablishing his price targets.

"I actually see the potential for a short-term head-and-shoulders top," says Redler, "where you have the first move which was a left shoulder into the high $1,300s and then you had the head above $1,420.

Now it's coming into support which has been $1,320 so if we get a feeble bounce up to $1,340, $1,350 and start rolling over that'll be a head and shoulders top."

Redler says if prices follow the head and shoulders top pattern, there could be a more drastic move to the downside to $1,200 before gold finds meaningful support.

Silver prices

settled $1.32 higher at $26.83 while copper added 10 cents to $3.83.

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Gold mining stocks

, a risky but potentially profitable way to

buy gold

, were rebounding.



was adding 2.21% to $45.86 while

Freeport McMoRan Copper & Gold


was 3.78% higher at $100.50. Other gold stocks

New Gold



Gold Fields


were trading at $8.68 and $16.74, respectively.


Written by Alix Steel in

New York.

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Alix Steel


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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.