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Canada’s main stock-market benchmark briefly swung to a loss for the year after gold fell for a seventh straight day as traders piled into wagers that key central banks will raise interest rates to offset the inflation shock of high oil prices.
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The precious metals selloff on Thursday dragged the S&P/TSX Composite Index down as much as 2.3 per cent to 31,566, the lowest since mid-December. A rebound later in the day pared the loss to 1.4 per cent, enough to leave it with a small gain for the year.
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The biggest percentage decliners on the gauge included B2Gold Corp and Endeavour Silver Corp., while Agnico Eagle Mines Ltd. and Barrick Mining Corp. were the top point contributors to the index’s slide as of 12:50 p.m. in Toronto.
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Canada benchmark’s 13 per cent weighting toward gold producers helped propel it to record after record last year, but 2026 has been rocky. “The phrase ‘live by the sword, die by the sword’ comes to mind,” IG Wealth Management Chief Investment Officer Philip Petursson said.
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As the U.S. dollar has regained safe haven status, gold surrendered some of its gains, especially as it had been fully valued, he added. On Thursday, the dollar slid as European central banks signaled that they may need to raise interest rates, driving up bond yields there.
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Falling metals prices have also hit materials stocks more broadly, with the group dropping about 24 per cent in Toronto since the beginning of the Iran war.
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The ascent of gold helped more than double the weighting of materials stocks in the S&P/TSX since the beginning of February 2022, when Russia invaded Ukraine.
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Brian Madden, chief investment officer at Toronto’s First Avenue Investment Counsel Inc., said that while he has benefited from that concentration, gold-miner weightings in Canadian indexes have risen to levels that draw concerns.
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Madden trimmed his gold positions in January when the “mania reached a fever pitch.”
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Some of that frenzy went to other parts of the market, like energy stocks, as the Middle East conflict sent Brent oil prices surging.
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“We’ve seen some of that money, that speculation move from gold into oil prices and oil stocks,” said Laura Lau, chief investment officer with Brompton Funds.
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S&P Dow Jones Indices is adding five gold and silver miners to the Canadian benchmark, effective March 23. AbraSilver Resource Corp., Avino Silver & Gold Mines Ltd., i-80 Gold Corp., Montage Gold Corp. and Americas Gold and Silver Corp. will bring the number of precious metals miners to 46.
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