By Alan Fein

(AXcess News) New York - Gold prices fell to their lowest level in a week Tuesday morning as investors lost interest in gold as a safe harbor investment, yet some gold stocks are sure to show gains when the market opens.

April gold futures were down $7.30 per ounce, or 0.65%, at $1,121.80 at 8:17am ET in New York as the dollar continued to show gains against major foreign currencies, pushing the price of gold lower as investors started to show interest in other markets.

Comments from China's head of the State Administration of Foreign Exchange indicating that risks associated with swings in the price of gold made the precious metal an unlikely candidate as the primary investment to diversify China's reserve holdings.  The news added to investors turning away from gold.

Spot gold lost $7.80, or 0.69%, to trade at $1,115.90, its lowest level since March 2.  Still, spot prices remain 1.8% up for the year.  Spot gold prices in London are used to fix prices by mining companies whose shares are likely to see downward trends this morning when the markets open in Toronto and New York.

The gold composite was down 1.06% at  982.3 at the close of trading in New York on Monday.  But despite the drop in gold stocks yesterday, some companies may see postive movement this morning.

Northgate Minerals Corp. (TSX: NGX; AMEX: NXG) reported record gold production of 362,398 ounces in 2009 moments ago.  The Company reported record cash flow of $187.2 million for the year.

Nova Gold (AMEX: NG) is going ahead with its plans to raise $75 million through the sale of 13.6 million shares in a private placement to private investment fund Quantum Partners.  The sale came on top of previously announced offering that when combined would raise Nova Gold $175 million.

Apollo Gold Corporation (TSX: APG; Amex: AGT) and Linear Gold Corp. (TSX: LRR) announced moments ago that they were merging to form a mid-tier gold producer.

Apollo Gold will acquire all of the outstanding shares of Linear Gold Corp., which is being offered at a 20% premium.  Linear shareholders will receive 5.474 Apollo shares for every share they own.

On a fully diluted basis, Apollo will be owned 57.1% by current Apollo shareholders and 42.9% by current Linear shareholders.

The deal places a value of C$102 million on Linear Gold.