NEW YORK (

TheStreet

) --

Gold

and silver prices were jumpy Friday as the metals' week-long rally was stymied by profit-taking and a rise in equities.

Gold for April delivery settled off session lows but was still down $6.50 to $1,409.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price started to slide Thursday after the market closed as oil fell under $98 a barrel and was continuing its downward spiral Friday. The gold price has traded as high as $1,412.40 and as low as $1,400.10.

The spot gold price was up just over $7, according to Kitco's gold index. The divergence between spot gold and the futures market indicates that physical buying is strong while technical buying isn't. Heading into the weekend, with uncertainty in Libya over the fate of leader Moammar Gadhafi, traders might be reluctant to put new money to work and might be more apt to book profits to cover potential losses in other areas.

The

Dow Jones Industrial Average

, on the flip side, seems to have stemmed its painful week as oil prices have retreated under $100 a barrel. Reports that Saudi Arabia would be ready to release more oil if there was a substantial loss of exports from Libya, calmed investors and eliminated the frantic need for safe-haven assets.

Silver prices

were following gold Friday, settling down 25 cents to $32.92 an ounce. Silver has seen a 1.8% correction since Thursday morning. Some analysts had predicted a steeper 10% correction.

Vote: How high will silver prices go in 2011?

The U.S. dollar index was adding 0.26% to $77.26, which could also provide a short-term headwind for silver and gold.

Scott Redler, chief strategic officer for T3Live.com, says that gold prices could move higher but that the metal ran so far so fast that it might need a breather. Gold rallied 2% in the past week factoring in a 2011 high of $1,418 an ounce. The rally has pretty much been a straight arrow up.

Vote: Where will gold prices finish in 2011?

"If we could stay here and

gold stays above $1,400

or $1,390 ... and

gold proves that demand is strong, we're going to get that breakout trade," says Redler.

Redler trades the

SPDR Gold Shares

(GLD) - Get Report

and would be adding to his position if gold chops around these levels. Redler says if an investor has a core long at these levels "sell some, let it prove it could hold higher and then add some back for cash flow if we can make those new highs between $1,435 and $1,445."

The GLD was hit with some profit-taking, shedding almost 7 tons of gold on Thursday. The GLD hasn't added any tons since Feb. 3.

The inflation debate has been swallowed up in the past week by the violent unrest in Libya, but rising commodity prices could remain supportive for higher gold prices.

India said food prices rose to 11.49% for the week ending Feb. 12 and U.S. companies are taking a hit in profits as input costs pop. Despite making 60 cents a share in the fourth quarter,

Gap

(GPS) - Get Report

said annual profits fell short of expectations due to higher cotton costs, which the company is having a hard time passing on to cash-strapped consumers.

A slew of food and beverage companies like

ConAgra

(CAG) - Get Report

and

Pepsi

(PEP) - Get Report

have been saying similar things, but Gap is one of the first retailers to get hit hard.

Russia's central bank raised interest rates by 25 basis points Friday. The move was unexpected and the latest attempt by the country to fight inflation, which is nearing 10%. The country has already stated it will be an active gold buyer this year.

The European Central Bank might be the next in line as the leaders meet on Thursday. There has been more talk of late of a rate hike to curb rising prices, which has become even more pressing as Brent crude touched $120 a barrel. Inflation in the EU is currently 2.2%.

The consumer goods sector and central banks aren't the only ones struggling with high prices, paradoxically

gold mining stocks are also feeling the inflation pinch during this earnings season.

Higher gold prices mean the companies make more for their gold, but a rise in global prices from oil to labor to taxes are squeezing some of the producers.

Gold mining stocks

, a risky but profitable way to

buy gold

, were rallying, for the most part.

Kinross Gold

(KGC) - Get Report

was adding 2.50% at $16.02 while

Harmony Gold

(HMY) - Get Report

was rising 0.26% to $11.66.

Newmont Mining

(NEM) - Get Report

was pummeled after lowering production guidance for 2011 on Thursday. Shares were slightly lower at $54.49.

Other gold stocks,

New Gold

(NGD) - Get Report

and

Gold Fields

(GFI) - Get Report

were trading at $9.57 and $17.59, respectively.

--

Written by Alix Steel in New York.

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