TSX pulls back as gold falls over Jan. 4-7 trading period

The resource-heavy TSX closed out its first week of the New Year for a loss as commodity prices pulled back from record territory on generally positive U.S. economic news that sent gold into a tailspin.

However, by the end of the week, stocks continued to decline after the U.S. reported positive job growth for December that was weaker than expected, while Canada’s unemployment rate held steady at 7.6% on the creation of 22,000 jobs.

Canada’s benchmark index, the S&P/TSX Composite index, fell 170.92 points, or 1.3%, to close the holiday-shortened Jan. 4-7 week at 13,272.3, as investors sold off resource stocks in the face of a stronger U.S. currency. Crude oil retreated to US$88.03 per barrel, down US$3.32.

With the price of gold shedding US$52.50, or 3.7%, to finish at US$1,368.90 an oz., and the spot price of silver off 7.1% at US$28.73 per oz., the Global Gold index was down 7.7% at 388.43. Barrick Gold dropped $4.43 to end at $48.69, Goldcorp lost $3.38 at $42.50, Newmont Mining gave back $4.68 to finish at $56.55 and Agnico-Eagle Mines was down $6.80 at $69.80.

Silver stocks took a beating as well. Silver Wheaton ended at $33.19 for a loss of $5.79, Pan American Silver slipped $4.33 to $36.60 and Silver Standard Resources finished the week off at $24.24, down $3.57.

Cline Mining, one of the most active issues, ended the week at $4.25, up 21 cents. In December, the company received government approval to begin underground mining at its New Elk coal mine in southern Colorado. Production will increase steadily over 2011, with the goal of reaching a rate of 3 million tonnes coal annually by year-end.

After fending off BHP Billiton’s hostile $130-a-share bid, a growing demand for food and fertilizer is pushing Potash Corp. of Saskatchewan‘s stock even higher. It closed up $11.37 to $165.82.

Shares in uranium producers and exploration companies alike reacted negatively to media reports that China has developed technology to reprocess spent nuclear fuel, which if true, could potentially reduce future uranium demand and have a negative impact on prices. Uranium One slipped 23 cents in heavy trading to end the week at $4.53.

Vista Gold jumped 57 cents, or 23.9%, to $2.95 on news that it doubled the proven and probable ore reserve to 4.1 million oz. at its Mt. Todd gold project in Australia. An updated prefeasibility study shows reworked capital costs of US$590 million for a 30,000-tonne-per-day open-pit and milling scenario that would produce 240,000 oz. annually over a 14-year life at a cash cost of US$530 per oz. The project throws off an after-tax IRR of 10.7%.

Newly-listed Emed Mining ended the trading period at 29 cents for a 61% gain. With 673 million shares outstanding, the junior recently closed a $32.5-million initial public offering in Canada and concurrent private placement in the UK priced at 13.5 cents per share. Emed is focused on its 100% owned Rio Tinto copper mine project in Spain and the Detva gold project in Slovakia, while owning 20% of AIM-listed Kefi Minerals, which is exploring for gold and copper in Turkey and Saudi Arabia.