Gold Futures Decline ahead of Year-End

- December 30th, 2010

Gold futures fell for the first time this week as investors sold off their positions ahead of the year’s end. The metal reached a record $1,432.50 an ounce on Dec. 7 and is headed for a 10th consecutive annual gain.

By Leia Michele Toovey-Exclusive to Gold Investing News

Gold futures fell for the first time this week as investors sold off their positions ahead of the year’s end. The metal reached a record $1,432.50 an ounce on Dec. 7 and is headed for a 10th consecutive annual gain.

Gold for February delivery declined $9.70 to $1,403.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,415.40 and as low as $1,403.50 early in Thursday’s session. January options expirations and tax considerations weighed on the price of the safe-haven metal, said George Gero, vice president of global futures at RBC Capital Markets in New York. “People who have some question about the direction of the market next year don’t want to have to pay taxes on something that might go down right after the new year,” Gero said.

A weaker dollar overshadowed positive U.S. jobs data to push gold into negative territory. The greenback slipped against the Euro, with the Euro recently trading at $1.3297, up from $1.3225 in New York trading Wednesday. New jobless claims in the United States fell to the lowest levels since July 2008 last week, the Labor Department said. Claims for unemployment benefits stood at 388,000 in the week ending December 25, down 34,000 from the previous week and below 400,000 for the first time since 2008. Economists had expected claims to fall, but only to 416,000. The upbeat data saw some investors shed gold, which is considered a hedge against economic uncertainty. “That would be a reason for traders to book some profits,” said Ralph Preston, senior market analyst with Heritage West Financial. “We’re talking about a five dollar pullback–it’s a blip on the screen when we’re at nose-bleed price levels like this.”

Company News

Armed robbers stole millions of dollars’ worth of gold, Wednesday morning from Vancouver based Luna Gold Corp.’s (TSXV:LGC) Aurizona gold mine in northeastern Brazil. “Theft in this manner is disturbing and regrettable,” said Luna Gold president John Blake in a statement. “The company is cooperating with authorities and will update the market when information becomes available.” About 1,500 ounces of gold was stolen, a significant amount for a junior miner that has only been producing gold since the second quarter of 2010. Roughly 500 employees work at the mine, but none of the staff were injured during the robbery. So far this year, the company has produced nearly 6,000 ounces of gold, nearly 80 percent in the third quarter ending September 30, 2010. In the nine months ending September 30, the company generated gold sales revenue of US$2.5 million, two thirds of which was generated in its third quarter. Based on Wednesday’s closing price of US$1,413.50 per ounce, the amount of gold stolen was worth more than $2.1 million.

Brigus Gold Corp. (TSX: BRD, NYSE Amex: BRD) has reached a settlement agreement in connection with its Huizopa exploration project located in the Sierra Madre Occidental mountains in Chihuahua, Mexico. The dispute related to the Huizopa Project pre-dated the June 2010 merger between Apollo Gold Corporation and Linear Gold Corp. to form Brigus Gold Corp. Settlement of the dispute allows Brigus to focus on its advanced Canadian asset portfolio while maintaining a significant royalty in the prospective Huizopa Project and receiving payments of up to US$9.5 million. In connection with the settlement agreement, the Company has entered into a related sale agreement pursuant to which Brigus has sold its 100 percent interest in its Mexican subsidiary, Minera Sol de Oro, S.A. de C.V. and its joint venture in the Huizopa Project to the Cormack Capital Group, LLC for proceeds of US$3.5 million, payable over a five-year term, while the Company retains a 3 percent Net Smelter Royalty over future production from the Huizopa Project. Cormack can reduce Brigus’ NSR to 2 percent by making a US$1.0 million payment to the Company and may also elect to pay up to 40 percent of the purchase price through the issuance of common shares in a publicly traded company listed on a recognized U.S. or Canadian national stock exchange. In addition, Brigus will receive a production bonus payment of US$5.0 million within one year of the commencement of commercial production at the Huizopa Project.

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