Economically speaking, Statistics Canada reported this morning that foreign investors added $3.1 billion of Canadian securities to their holdings in August, following a $10.1 billion divestment in July. Gold is a more attractive investment in times of low rates as the metal doesn’t pay interest.
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Gold has climbed after global stocks capped the worst quarterly performance since 2011 amid rising concern that a slowdown in China is accelerating.
Canada’s main stock market in Toronto fell to negative territory on Thursday as medical shares weighed on the trading sentiment after a giant Canadian drug maker was subpoenaed by US prosecutors. Valeant slumped 22 percent in September, the biggest monthly decline since 2007.
The most influential movers on the index included Goldcorp Inc, which rose 3.4 percent to C$19.07, and Barrick Gold Corp, which advanced 5.5 percent to C$10.23. Chinese data from imports to factory gate deflation has indicated the weakness in the economy is persisting. It slipped 0.9 per cent from last Friday’s close.
The country has faced a significant decline in the performance of the energy sector this year, and a report from one major credit rating agency suggests the climate is only worsening for Canadian energy companies while oil and gas prices hold below US$50 a barrel.
“The market is still looking for direction on Fed rates”, he said.
But the losses were overpowered by the gains from the resources shares over a rally in gold prices, as the most active gold contract for December delivery rose 14.4 USA dollars, or 1.24 percent, to settle at 1,179.80 dollars per ounce on the COMEX division of the New York Mercantile Exchange Wednesday. The index’s valuation dropped to as low as about 16 at the end of September, the lowest since October 2014.
Miners were joined by heavyweight Valeant Pharmaceuticals global Inc as well as a few energy names in the push higher.
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“As a result, all currencies and commodities that are the other side of a USA dollar trade are lifting”, he said.
