Inflation worries shook markets after the producer price index jumped 1.8% in November. During times of inflation, the U.S. dollar loses value and investors buy gold as an alternative asset buoying prices. Investors are also waiting on the result of the Federal Reserve's FOMC meeting. The Fed is expected to keep interest rates low for now but there is a growing consensus that the Fed will raise rates sooner than expected to combat growing inflation.

Analysts expect gold to stay in a tight range of $1,110 to $1,140 for the end of the year as profit taking and bargain hunting restrict prices. "I think we're seeing light volume in the market as a start", says Will Rhind, head of U.S. operations at ETF Securities. "Expect to see more concentration on inflation numbers over the next year as people look for any signs of consumer prices in the real economy."

The U.S. dollar index was slipping .13% to $76.82 and inversely gold prices were up $9 to $1,132 at the Comex division at the New York Mercantile Exchange. Gold deliver for February has traded as high as $1,136.10 and as low as $1,122.40.

Silver prices were rising 8 cents to $17.53 while copper was up 3 cents to $3.17.

Mining stocks, a more leveraged way to invest in gold, were finding some strength. Barrick Gold(ABX Quote) and Newmont Mining(NEM Quote) were both higher trading at $39.64 and $51.11 respectively. Shares of Freeport McMoran Copper and Gold(FCX Quote) were rising 1% to $78.09 while Yamana Gold(AUY Quote) was up 1.42% to $12.15. Randgold Resources(GOLD Quote), TheStreet contributor L.A. Little's favorite gold stock, was rising 1.99% to $81.61.

Eldorado Gold(EGO Quote) was higher by 1.50% to $13.41 after TD Newcrest increased it price target on the stock from $15 to $16. However, the stock was downgraded from a buy to hold.

Shares of SPDR Gold Shares(GLD Quote) were rising slightly to $110.88. Volume has been in slow decline this week as the holiday season approaches.

--Written by Alix Steel in New York.