NEW YORK ( TheStreet ) -- Gold prices drifted lower Wednesday as a stronger dollar weighed on prices and as traders took profits headed ahead of the Thanksgiving holiday.

Gold for December delivery shed $6.50 at $1,695.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,710.80 and as low as $1,677.10 an ounce while the spot price was down $11, according to Kitco's gold index.

Silver prices lost $1.06 at $31.88 an ounce while the U.S. dollar index was up 1.21% at $79.18.

Gold prices have had a volatile week -- down 2.7% Monday then up 1.4% Tuesday -- and traders took profits Wednesday after options expiration. George Gero, senior vice president at RBC Capital Markets, noted that options expiration was somewhat constructive for gold.

"Most of the December contract sales went to February, April and June contracts," he said, "there was less than expected open interest loss," which means that traders still wanted to be long gold. Ross Norman, CEO of SharpsPixley, says that speculative traders might be rebuilding their long positions after the big shake out in September when gold plummeted 10% in a few days.

With volume light over the next few days "the complex remains vulnerable to bouts of long liquidation/cash generation," said James Moore, research analyst at But the SPDR Gold Shares ( GLD) added 6 tons Tuesday, which points to strong buying after a selloff. Moore said this suggests gold will remain cushioned and prices will push back to $1,800 an ounce.

Bouts of liquidation were triggered by deflationary fears as Chinese manufacturing activity slowed in November to the lowest level in 32 months and as eurozone manufacturing remains in contraction territory. Attempts to address the debt problem in Europe haven't been enough, sparking weakness in the euro, boosting the dollar and providing a headwind for gold.

With borrowing costs rising for France and Spain, the International Monetary Fund stepped in on Tuesday with plans to make loans available for creditworthy countries -- offering up to five to 10 times the amount the country in question contributes to the IMF for up to two years.

Tony Crescenzi, strategist and portfolio manager at PIMCO, said the program targets smaller countries "and therefore is unlikely to lead to much in the way of new bank reserves in the global system."

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