TSX slips as Fed comments weigh on gold

Thu Jun 7, 2012 4:39pm EDT
 
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By Jennifer Kwan

TORONTO (Reuters) - Canadian stocks stumbled on Thursday as gold prices skidded after U.S. Federal Reserve Chairman Ben Bernanke offered no hints further stimulus was imminent, halting a rally fueled by a surprise interest rate cut in China.

Gold tumbled as the comments by Bernanke prompted investors to unwind bullish bets on expected easing after last week's dismal U.S. jobs report.

"Bernanke didn't give the green light towards quantitative easing, a factor that would've supported gold," said Fergal Smith, managing market strategist at Action Economics. "That's been a disappointment for folks who are long gold."

Bullion was hit especially hard as it has been heavily used by institutional investors to hedge against the economic uncertainties brought by monetary easing.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended the day down 41.28 points, or 0.35 percent, at 11,592.12, but most of its key subsectors were higher.

Plunging gold stocks mainly kept the broader index under pressure and from keeping pace with gains in overseas markets.<MKTS/GLOB>

Barrick's (ABX.TO: Quote) shed 4.2 percent at C$39.79 after the surprising ouster of Chief Executive Aaron Regent on Wednesday raised more questions than it answered for anxious investors.

Goldcorp (G.TO: Quote) sank 2.9 percent to C$40.12, and Yamana Gold (YRI.TO: Quote) was down 2.5 percent at C$16.12.   Continued...

 
A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch