(The Canadian Press)

(The Canadian Press)

Gold gets a lift as hedge with Canada’s deficit to surpass $340 billion

The precious metal hit another nine-year high and is making a run for US$2,000 an ounce

Canada’s main stock index moved higher along with gold prices Wednesday as the country’s deficit was projected to surpass $340 billion.

The precious metal hit another nine-year high and is making a run for US$2,000 an ounce, said Greg Taylor, chief investment officer of Purpose Investments.

“Gold is looking like a sector which is really doing quite well and should continue to keep going,” he said.

Gold is a hedge against inflation, and massive stimulus from central banks and governments brought on by the COVID-19 pandemic.

The Liberal government announced Wednesday details of how the virus has dragged down the domestic economy and is expected to send the deficit to a historic $343.2 billion.

“Canada’s number is definitely a lot worse than everyone expected and just symbolic of how governments around the world are printing money and spending so much on these different programs to keep the economies going.”

Materials was the brightest sector on the TSX, gaining nearly 2.1 per cent with shares of Wesdome Gold Mines Ltd. and Kirkland Lake Gold Ltd. increasing by 10.5 and 7.6 per cent respectively.

The August gold contract was up US$10.70 at US$1,820.60 an ounce and the September copper contract was up 2.7 cents at US$2.82 a pound.

Technology, industrials and financials were also higher as the S&P/TSX composite index closed up 33.69 points at 15,629.19 in a late rally.

In New York, the Dow Jones industrial average was up 177.10 points at 26,067.28. The S&P 500 index was up 24.62 points at 3,169.94, while the Nasdaq composite was up 148.61 points at 10,492.50.

The tech-heavy Nasdaq set another record close as Apple Inc. reached another high.

The Canadian stock market underperformed U.S. markets largely because of its makeup that is more focused on banks and commodities, and lacks the superstars that have kept the U.S. markets going, said Taylor.

“Canada has a few with Shopify being the most notable, but outside that we’re definitely underweight tech in the TSX and that’s been causing a lot of the underperformance.”

The Ottawa-based tech darling lost some ground, while Constellation Software Inc. rose 3.6 per cent and Lightspeed POS Inc. was up 3.3 per cent.

Cyclical sectors continue to be hurt by rising coronavirus infections in the U.S. that have investors fearing that the economy won’t be as strong in the second half of the year as some are expecting.

“Until we really get clarity on that, you’re going to get the cyclical sectors that are really going to be underperforming and people are going to be more focused on buying the tech stocks, which seems to be the sector that’s been the best to come out of this environment,” said Taylor.

Industrials was pushed up with Air Canada climbing 2.2 per cent.

Health care lost 2.2 per cent as Bausch Health Companies Inc. fell 5.7 per cent, while energy dropped nearly 2.1 per cent as the August natural gas contract was down 5.2 cents at US$1.82 per mmBTU. That sent Vermilion Energy Inc. down 4.8 per cent.

Crude oil prices rose on higher U.S. stockpiles while gasoline inventories fell by the most since March.

The August crude contract was up 28 cents at US$40.90 per barrel.

The Canadian dollar traded for 73.87 cents US compared with 73.62 cents US on Tuesday.

This week’s trading is relatively quiet before the start of corporate earnings next week.

Taylor said it will be interesting to see how second-quarter results will stack up against one of the stronger quarters in history for equity markets.

“So we’ll see how much of those gains are justified,” he said.

Although results are expected to be down from last year, Taylor said investors will be looking to see how different they are from the first quarter.

“And so far I think people are banking on that the quarterly reports are going to be better than what they were worried about initially.”

This report by The Canadian Press was first published July 8, 2020.

Companies in this story: (TSX:AC, TSX:SHOP, TSX:LSPD, TSX:BHC, TSX:CSU, TSX:WDO, TSX:KL, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Volunteers sort food donations during the Agassiz Fire Department’s food drive on Thursday, Dec. 5, 2019. (Agassiz Fire Department/Facebook)
VIDEO: Agassiz Fire Department to host COVID-safe food drive

This year’s drive looks a little different

With news that Santa won’t be coming to Cottonwood Centre this year, April Blais wanted to set up a photo op with the jolly old elf in her front yard. (Submitted photo)
Chilliwack family blown away by response to Christmas light display

The Blais family has decked out their yard with holiday decor, collecting food bank donations

Abbotsford residents gather in the Clearbrook area on Monday to demonstrate against what they say is unfairt treatment by the Indian government to farmers in the Punjab region of that country. (Maan Sidhu photo)
Abbotsford residents gather to protest unfair treatment of India farmers

Locals believe new bills will devastate small farms, demand farmers be allowed to protest peacefully

The paraglider pilot, while attempting to free himself, dropped 30 feet and sustained serious injuries as Kent-Harrison Search and Rescue members worked quickly to extract him from the trees. They were able to get him to a waiting ambulance at the end of a nearby forest service road. (Contributed Photo/Dave Harder)
UPDATE: Rescued paraglider being treated for non-life threatening injuries

Pilot tried to self-rescue but sustained serious injuries in a 30-foot fall

A B.C. Ambulance Service paramedic wearing a face mask to curb the spread of COVID-19 moves a stretcher outside an ambulance at Royal Columbia Hospital, in New Westminster, B.C., on Sunday, November 29, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. records deadliest weekend of COVID-19 pandemic with 46 deaths; more than 2,300 cases

Provincial health officer Dr. Bonnie Henry provides COVID-19 update

Mirandy Tracy, left, and Tara Kurtz are two Langley mothers who are organizing a "sick out" for Tuesday, Dec. 1 to protest COVID conditions in schools. They're calling for masks and smaller class sizes, among other things. (Matthew Claxton/Langley Advance Times)
Politician, labour leader throw support behind student Sick Out day

Langley parents started the movement to keep kids home on Dec. 1 as a protest

A family emerged with a purchase at the Tannenbaum Tree Farm at 5398 252 St in Aldergrove on Sunday, Nov. 29, 2020 (Dan Ferguson/Langley Advance Times)
Christmas tree season is off to an early start

People are ‘bored’ with staying home due to COVID-19 and want to decorate early, farm owner believes

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A heavy police presence was on scene on Dec. 28, 2017 following the shooting death on Bates Road in Abbotsford of Alexander Blanarou, 24, of Surrey. (Abbotsford News file photo)
Three men charged with Abbotsford shooting death of Surrey man

Alexander Blanarou, 24, was killed in a rural area on Dec. 28, 2017

THE CANADIAN PRESS/Nathan Denette
B.C. researchers launch study to test kids, young adults for COVID-19 antibodies

Kids and youth can often be asymptomatic carriers of the novel coronavirus

Most Read