The Gold Price slipped to a new 7-week low for US investors early Tuesday, dropping through yesterday's low at $1090 per ounce as world stock markets rose and government bonds fell.

The US Dollar rose for the ninth time in 13 sessions on the forex market, hitting its best level against the "safe haven" Japanese Yen since the start of November.

"There's some speculative demand for gold," said Wolfgang Wrzesniok-Rossbach, sales director at Germany's Heraeus refinery, to Reuters earlier.

"There's also physical demand, not so much in Europe but definitely in Asia."

"The metal [on Monday] broke last week's low of 1095 and the 4-month rising trend line at 1097," says a technical note from bullion bank Scotia Mocatta.

"Next support level comes in at 1070 from our October high."

"It is the weak Euro that is the real story here, not a strong Dollar," writes Steven Barrow, chief currency strategist at Standard Bank.

"On the more likely scenario of further Euro weakness, risky assets could find it hard to shake off the factors that are undermining Euro/Dollar right now."

Showing an average correlation co-efficient with Dollar-Gold prices of +0.51 over the last 10 years, the Eur/USD exchange rate most often moves in the same direction.

Its correlation would stand at +1.0 if gold and the Euro moved together in lockstep against the US currency.

Commenting on the US currency's 5% rally of the last four weeks, "The Dollar had been weak but the other currencies are not much better," said Swiss private-client advisor and Asia-based author Marc Faber to India television on Friday last week.

"The ECB in Europe is also a money printer and the Euro has many problems...So what could happen is that the Dollar is very strong but gold still holds or even goes up if foreign currency holders move some money into gold."

Noting that global central-bank currency reserves have risen 7 times over since 1996, "Gold hasn't gone up 7 times," Faber continued, adding that Asian central banks hold some 70% of today's $7 trillion foreign reserves but keep less than 2% of their reserves in gold.

"I think a lot of central banks will follow the example of the Reserve Bank of India."

The RBI bought 200 tonnes of Gold Bullion from the International Monetary Fund in late Oct., taking gold as a share of its forex reserves to almost 6%.

"[It] deserves applause," says Faber. "By and large it's a very well-run central bank."

Moscow's finance ministry confirmed yesterday that it's sold 30 tonnes of Gold Bullion to the Russian central bank, effecting no net change in the nation's bullion holdings but raising the equivalent of $1 billion to reduce Russia's budget deficit.

The finance ministry reckons its 2009 deficit will equal some 7.3% of Russia's gross domestic product.

Russia's central bank has grown its gold reserves by almost two-thirds since former president (and current prime minister) Vladimir Putin said he wanted gold to account for 10% of foreign reserves in late 2005

Yesterday's news takes its hoard above 621 tonnes, knocking Holland into ninth place in the world league of central-bank gold holders and raising gold as a percentage of Moscow's forex reserves to 4.8%.

"I don't think the central bank will [now] be selling it anywhere, although it can dispose of its reserves as it pleases, buy or sell," reckons Alexei Morozov, metals analyst for UBS in Moscow.

Government bond prices meantime fell early Tuesday, pushing the fixed-income yield offered to new buyers of 10-year US, UK and German debt up towards new 2009 highs.

Europe's single Euro currency today dropped from a brief overnight bounce, slipping back towards 15-week lows at $1.4260.

That helped keep the Gold Price for French, German and Italian investors above €764 an ounce.

The British Pound meantime fell to a 10-week low vs. the Dollar, buoying the Gold Price in Sterling above a 1-week low at £680.

London's FTSE 100 share index meantime enjoyed a typical "Santa Claus" rally, adding another 1% to near fresh 2009 highs.

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