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Randgold Resources and Petropavlovsk retreat as gold stays at $1,090 on stronger US Dollar

Gold retreated today after getting within $3 of the US$1,100/oz mark to settle at US$1,091/oz as the US Dollar firmed ahead of today’s decision on interest rates in the US.

Investors will also be waiting for the US Senate’s confirmation vote on Ben Bernanke’s second term as Chairman of the Federal Reserve, which is set for Thursday and will have an impact on the movements in the currency markets.

The greenback rose yesterday following news from China, whose central bank has reportedly told a few large banks to raise their reserves following a series of measures to curb economic activity and prevent one of the world’s fastest growing economies from overheating that were announced earlier this month. The yellow metal, which is seen as an investment alternative to the dollar, was pushed down to US$1,190/oz by the news.

Other precious metals followed as silver and platinum slid to US$16.57/oz and US$1,513/oz respectively.

Mining stocks mostly declined today. Blue chips were mixed as while silver and gold miner Fresnillo (LSE: FRES) lost almost 4%, while gold miner Randgold Resources (LSE: RRS) was flat and platinum producer Lonmin (LSE: LMI) gained 1%.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) also remained unmoved.

Midcaps were in the red with gold miner Petropavlovsk (LSE: POG) sliding 2.4%, while Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) lost 1%.

Most juniors followed the trend and declined. London listed Australian gold producer Leyshon Resources (AIM: LRL) and Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (AIM: CGH) both lost about 6.5%, Philippines focused gold producer Medusa Mining (AIM&ASX: MML), commodity asset development company Mercator Gold (AIM: MCR) and Argentina focused gold explorer Patagonia Gold (AIM: PGD) all lost nearly 5%.

Brazil focused gold miner Horizonte Minerals (AIM: HZM) and Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) were down 3.5%.

Disclosure: The author holds no positions in the company