Udpated for stock and gold price movements

NEW YORK (

TheStreet

) -- Shares of gold-mining companies rose sharply Tuesday morning after the precious metal broke $1,000 an ounce intra-day for the first time since February -- but the sector trended into the red later in the session after gold failed to hang on to that psychologically rich level.

On the New York Mercantile Exchange, gold futures for December delivery, the most active contract, retreated in the afternoon, settling at $997.30 a troy ounce after earlier reaching $1,009.70 -- its highest point since surmounting $1,033 in March 2008.

Gold prices have risen sharply since the middle of last week on worries about the sustainability of the long summer rally in equities and on fears of inflation and a weakening dollar.

Indeed, the U.S. dollar index -- a measure of the value of the greenback against six foreign currencies -- fell almost 1% to 77.32 Tuesday afternoon, moving near a barrier that some traders have seen as an important mark. As the dollar sinks toward 77, "the inflation argument starts to get stronger," said Darin Newsom, senior commodities analyst at DTN. "Then you'll see money rolling into gold and crude oil as an inflationary hedge."

In March 2008, when gold touched that $1,033 high, the dollar index fell to 70.698, its lowest point since the gauge was introduced in 1973.

Shares of gold extractors and producers had turned mostly red by Tuesday afternoon.

Barrick Gold

(ABX)

stock, for instance, which jumped as much as 5% not long after the open, was trading at $39.24, off 2%.

Goldcorp

(GG)

also slipped late in the session, trading at $40.94, down 1.5%.

Other early gainers also gave back their advances.

Kinross

(KGC) - Get Report

, whose stock jumped 6% in the early going, was down 0.14% to $21.85.

Yamana

(AUY) - Get Report

, which had enjoyed a similar percentage uptick in the a.m., was trading down 1.4% at $10.48 in the last hour of the regular session.

Agnico-Eagle

(AEM) - Get Report

, meanwhile, fell 2.2% to $65.75.

Elsewhere, shares of Newmont Mining fell 1.2% to $45.68 after the Denver-based producer said it received a 20-year land-use permit for a big copper and gold mine in Indonesia, relieving concerns made public by the company that it might be forced to end production at the mine by 2010.

Still, delays in obtaining the permits will likely lead to reduced copper and gold production there, Dahlman Rose analyst Anthony Rizutto wrote in a note to clients. He nonetheless maintained his buy rating on Newmont stock.

Shares of diversified miners held onto their gains late Tuesday as copper and other base-metal prices spiked sharply on commodities markets in London and the U.S. Freeport McMoRan, which has some gold operations, saw its stock advance 2.9% to $67.90 Tuesday afternoon.

Among the ore giants, American depositary receipts of Rio Tinto, BHP Billiton and VALE gained 4.6%, 3.9% and 3.6%, respectively.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.