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Gold stocks experience mixed trading in North America as gold continues to fall below $1,090

Last updated: 19:40 22 Dec 2009 GMT, First published: 20:40 22 Dec 2009 GMT

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Gold continues to be pressured by a strengthening Dollar. After a resolute European trading session on Monday, the yellow metal dipped below $1,100 and closed the day near $1,096. As the volume continues to drop out of global markets ahead of the Christmas break, 3-month gold futures slipped a further $9 lower, to change hands below $1,086 as the Dollar Index remains unchanged this morning.

Commentators and analysts have generally pointed to profit taking, as a stabilising Dollar has provided ‘in-the-money’ bulls to liquidate the positions following the quarter's golden rally, which peaked at $1,226. Over recent sessions the dollar has also benefited from concerns of instability in the Eurozone, with Moody’s becoming the latest ratings agency to downgrade Greek government debt.

Gold’s rise from $750/ounce a year ago was driven primarily by growing fears over inflation and specifically the decline of the US Dollar. The greenback's decline has increased the relative appeal of physical assets, particularly gold, to protect against further devaluation.

Gold and the US Dollar have a directly inverse relationship; typically a fall in the dollar will prompt an increase in value for gold and vice-versa. Like all major commodities gold is primarily priced in dollars, therefore a change in relative value of the dollar directly impacts on the commodity's relative value. Crucially, when the dollar is weak, international dollar reserves devalue, subsequently central banks increase their demand for alternative assets such as gold.

On Wall Street, gold equities have been having a fairly mixed trading session, AngloGold Ashanti (NYSE: AU) and Polyus Gold (IOB: PLZL.IL) both dropped more than 1% this morning, fellow Australian based producer Lihir Gold (NASDAQ: LIHR) followed, down around half a percent. Also falling was the world’s largest gold miner, Barrick Gold (NYSE: ABX), edging marginally lower.

Elsewhere Yamana Gold (NYSE: AUY) was fairly buoyant in an otherwise indifferent market, as they climbed nearly 1% after revealing a significant expansion to their credit facilities. GoldCorp Inc (NYSE: GG) and Kinross Gold (NYSE: KGC) rose almost half a percent, meanwhile GoldFields (NYSE: GFI), Randgold Resources (NYSE: GOLD) and Newmont Mining Corp (NYSE: NEM) all gained marginally.
               
Elsewhere on the New York Stock Exchange, emerging producer IAM Gold (NYSE: IAG) advanced 2%, while Agnico Eagle (NYSE: AEM) also rose marginally.

Trading was fairly flat on the American Stock Exchange, with New Gold (AMEX: NGD) the only notable riser on Tuesday. Minefinders (AMEX: MFN), Eldorado Gold Corp (AMEX: EGO) and Rubicon Minerals (AMEX: RBY) were also marginally higher. Whilst equally sedate, Keegan Resources (AMEX: KGN), Nevsun Resources (AMEX: NSU) and Exeter Resource Corp (AMEX: XRA) were down fractionally.

In Toronto, Kent Exploration (TSX-V: KEX) was the leading light as they climbed over 6.5%, Bravo Venture Group (TSX-V: BVG) and Centamin Egypt (TSX: CEE) were higher also, each rising around 1%.

Victoria Gold Corp (TSX-V: VIT) moved in the opposite direction, dipping 3%, Timmins Gold Corp (TSX-V: TMM) also traded lower, losing more than 1%. Lydian Gold (TSX: LYD), Hawthorne Gold Corp (TSX-V: HGC) and Kootenay (TSX: KTN) were unchanged.

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