Newspaper article The Canadian Press

TSX Lower amid Falling Gold Prices, Heavy Slate of Earnings, Solid U.S. Growth

Newspaper article The Canadian Press

TSX Lower amid Falling Gold Prices, Heavy Slate of Earnings, Solid U.S. Growth

Article excerpt

TSX lower amid falling gold prices, earnings

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TORONTO - The Toronto stock market closed lower Thursday as a sell-off in gold stocks accelerated alongside a drop bullion prices.

The S&P/TSX composite index declined 68.88 points to 14,458.69 as traders also balanced a strong reading on U.S. third-quarter economic growth.

The Canadian dollar was down 0.04 of a cent to 89.32 cents US.

U.S. growth in the July-September period came in at an annualized pace of 3.5 per cent. Economists had expected a gain of three per cent.

A strong showings by credit card payment company Visa also helped lift New York markets and the Dow Jones industrials ran up 221.11 points to 17,195.42.

The Nasdaq was up 16.91 points at 4,566.14 and the S&P 500 index climbed 12.35 points to 1,994.65 .

Traders also considered an investing environment without massive stimulus from the Federal Reserve a day after the U.S. central bank said its third round of quantitative easing would end this month. The massive program of buying bonds was seen as a huge benefit to stock markets as the program kept long-term rates low and encouraged a strong rally.

Quantitative easing had also helped support higher gold prices because of worries the stimulus program would stoke inflation. But gold prices continued to retreat Thursday as the December contract dropped $26.30 to US$1,198.60 an ounce and the TSX gold sector fell almost eight per cent.

"Longer term, gold prices should move with inflation expectations and with inflation coming down, obviously that is going to hurt," said Ben Jang, portfolio manager at Nicola Wealth Management in Vancouver.

"Also, with gold prices around US$1,200 an ounce, we're just below the marginal cost of production for gold. So you really need to see the gold companies improve their operations. If not, we will continue to see volatility in gold equities. …

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