Goldcorp (G.TO) agreed to buy Argentina-focused gold miner Andean Resources AND.AX AND.TO for C$3.6 billion ($3.4 billion), trumping a competing offer from fellow Canadian miner Eldorado Gold Corp.

The takeover is the latest in a series of gold-mining deals this year, including Australia's Newcrest Mining's (NCM.AX) $8.4 billion purchase of rival Lihir Gold and Canada's Kinross (K.TO) $7.1 billion stock bid for Red Back Mining.

Near-record prices for the metal XAU are boosting the hunt for reserves and pumping cash into the sector.

Goldcorp said its cash and share offer -- at C$6.50 per share a 35 percent premium to Andean's last traded price in Toronto -- has been approved unanimously by the boards of directors of both companies.

Goldcorp's offer topped an all-share bid from Eldorado worth C$6.36 a share.

"Andean's plan to sell does not come as a surprise. It was set up to be taken over at some stage. It was a question of how and what price," said Tim Barker, portfolio manager at BT Financial Group. "The pricing and the premium looks pretty reasonable."

Andean's shares closed up more than 45 percent at C$6.98 on the Toronto Stock Exchange, while Goldcorp shares were down 3.7 percent at C$44.49.

"This is a reasonably strong bid by Goldcorp, though with Eldorado still in the picture, there does remain the possibility that a bidding war may emerge," said Paradigm Capital analyst Don MacLean, in a note to clients.

Gold consumption rose by more than a third in the second quarter of 2010 and is set to stay strong with India and China providing the main thrust.

Investment demand is also expected to be firm as uncertainty about the global economic outlook boosts the appeal of gold as a safe haven.