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Gold shares soften, but Exeter Resources bucks trend after Aquiline Resources jumps on takeover bid from Pan American Silver

Published: 02:04 15 Oct 2009 AEDT

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After weeks of persistent decline, the falling US Dollar continues to drive the Gold rally. The yellow metal has now been trading above 2008’s previous highs for a seventh successive session. Overnight, the most recent advance saw Gold make yet another new high to trade over $1,070, in electronic trading the Comex December contract traded as high as $1,072.


The Gold price has eased somewhat following the early strength, and the yellow metal is currently changing hands around $1,062.


After a consolidating period on Friday and Monday, the gold market changed gears yesterday, gaining more than $20 over the past couple of sessions. Tuesday saw the yellow metal continued to gain momentum and test $1,070 in early trading before easing back as the day progressed.


The latest move was triggered by further broad based Dollar weakness. The US Dollar index on London’s Intercontinental Exchange (ICE) fell another half percent overnight to stand at 75.78. The Dollar index has fallen consistently from its 2009 high of 90 points in March. The US Dollar index represent the relative strength of the Dollar against a basket of the 6 other major global currencies.


Some analysts claim that this most recent movement in Forex and Commodity markets comes as reports suggest that the Federal Reserve will maintain their unprecedented low rates for longer than the other major central banks.


The recent rally in Crude Oil, which has seen crude hit $75, has also supported the wider commodity market.


As investors evaluate the current price action in the gold market, analyst sentiment is beginning to conflict with some pointing to an overbought yellow metal.  On Friday a new monthly investment strategy report from CIBC, ‘Global Positioning Strategies’ seemed downbeat on the gold rally’s sustainability. According to CIBC the main factors behind Gold’s recent surge were fading off with investor worries easing and the US Dollar being poised for a “relief rally” in the next two or three months, having “overshot to the downside.”


On the other hand, more bullish analysts are expecting a sustained rally; some even expect that gold will rise a further 10% from today’s record breaking high, with prices speculated to reach between $1,100 - $1,300 an ounce before the end of 2009.


On Wall Street Gold stocks were slight weaker today, International gold producer Randgold Resources (NYSE: GOLD, LSE: RRS) rose marginally gaining a quarter of a percent.  The world’s largest gold miner Barrick Gold (NYSE: ABX) was relatively unchanged. While Canada based Yamana Gold (NYSE: AUY) fell 1.25%, similarly Agnico Eagle (NYSE: AEM) also slipped around 1% this morning in New York.


South America focused exploration play Exeter Resource Corp (AMEX: XRA) surged over 11%, after fellow Latin American developer Aquiline Resources (TSX: AQI) became subject of a C$626 million takeover by Pan American Silver Corporation (TSX: PAA).


Keegan Resources Inc (AMEX: KGN) gained over 1% and New Gold (AMEX:NGD) gained almost half a percent.


Mexico focused junior producer Minefinders (AMEX: MFN), Nevsun Resources (AMEX: NSU) and Dual listed Eldorado Gold (TSX: ELD; AMEX:EGO) all dropped more than 1%, Ontario based Rubicon (AMEX: RBY) fell half a percent.


Centamin Egypt (LSE: CEY, ASX: CNT, TSX: CEE) and Timmins Gold (TSX-V: TMM) both rose more than 1%. TSX Venture stock Victoria Gold Corp (TSX-V: VIT) and Hawthorne Gold Corp (TSX: HGC).


Low-cost emerging gold producer Gold Resource Corp (OTCBB: GORO) rose 1% in the OTC market.

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