(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

Just Posted

Area A Director Ali Grieve (right), Village of Fruitvale Mayor Steve Morissette (front), and Village of Montrose Mayor Mike Walsh (left) held a congratulatory ceremony for Beaver Valley students who are part of the Class of 2021 graduates of J. L. Crowe Secondary at Beaver Creek Park on Thursday. Photo: Jim Bailey
Beaver Valley Grads of 2021

Beaver Valley mayors, RDKB Area A director celebrate their 2021 graduates with gift ceremony

Adrian Moyls is the Selkirk College Class of 2021 valedictorian and graduate of the School of Health and Human Services. Photo: Submitted
Selkirk College valedictorian proves mettle in accomplishment

Adrian Moyls is a graduate of the School of Health and Human Services

A volunteer delivers food to families as part of a West Kootenay EcoSociety program. Photo: Submitted
Farms to Friends delivers 2,500th bag of food to families in need

The program services communities in the Nelson, Trail and Castlegar areas

Selkirk College has begun its search in earnest for a leader to replace president Angus Graeme who is set to retire from his position in May 2022. Photo: Submitted
Selkirk College seeks community input for president search

Current president Angus Graeme retires next year

A report shows nine West Kootenay communities are have more low-income persons than the provincial average. File photo
Study casts new light on poverty in the West Kootenay

Nine communities in region have more low-income residents than provincial average

Marco Mendicino, Minister of Immigration, Refugees and Citizenship during a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada to welcome 45,000 refugees this year, says immigration minister

Canada plans to increase persons admitted from 23,500 to 45,000 and expedite permanent residency applications

This undated file photo provided by Ernie Carswell & Partners shows the home featured in the opening and closing scenes of The Brady Bunch in Los Angeles. Do you know the occupation of Mike Brady, the father in this show about a blended family? (Anthony Barcelo/Ernie Carswell & Partners via AP, File)
QUIZ: A celebration of dad on Father’s Day

How much do you know about famous fathers?

Emily Steele holds up a collage of her son, 16-year-old Elijah-Iain Beauregard who was stabbed and killed in June 2019, outside of Kelowna Law Courts on June 18. (Aaron Hemens/Capital News)
Kelowna woman who fatally stabbed teen facing up to 1.5 years of jail time

Her jail sentence would be followed by an additional one to 1.5 years of supervision

Cpl. Scott MacLeod and Police Service Dog Jago. Jago was killed in the line of duty on Thursday, June 17. (RCMP)
Abbotsford police, RCMP grieve 4-year-old service dog killed in line of duty

Jago killed by armed suspect during ‘high-risk’ incident in Alberta

The George Road wildfire near Lytton, B.C., has grown to 250 hectares. (BC Wildfire Service)
B.C. drone sighting halts helicopters fighting 250 hectares of wildfire

‘If a drone collides with firefighting aircraft the consequences could be deadly,’ says BC Wildfire Service

A dose of the Pfizer-BioNTech COVID-19 vaccine is pictured at a vaccination site in Vancouver Thursday, March 11, 2021. THE CANADIAN PRESS/Jonathan Hayward
NACI advice to mix vaccines gets varied reaction from AstraZeneca double-dosers

NACI recommends an mRNA vaccine for all Canadians receiving a second dose of a COVID-19 vaccine

A aerial view shows the debris going into Quesnel Lake caused by a tailings pond breach near the town of Likely, B.C., Tuesday, Aug. 5, 2014. THE CANADIAN PRESS/Jonathan Hayward
Updated tailings code after Mount Polley an improvement: B.C. mines auditor

British Columbia’s chief auditor of mines has found changes to the province’s requirements for tailings storage facilities

A North Vancouver man was arrested Friday and three police officers were injured after a 10-person broke out at English Bay on June 19, 2021. (Youtube/Screen grab)
Man arrested, 3 police injured during 10-person brawl at Vancouver beach

The arrest was captured on video by bystanders, many of whom heckled the officers as they struggled with the handcuffed man

Most Read