Gold miners hit hard as TSX drops to one-week low

Thu Sep 12, 2013 5:11pm EDT
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By John Tilak

TORONTO (Reuters) - Canada's main stock index dropped to its lowest point in a week on Thursday as gold-mining shares tracked a dive in bullion prices on market fears the U.S. Federal Reserve will announce a pullback of stimulus measures at its meeting next week.

Bullion, seen a safe-haven asset, shed 3 percent after gaining sharply in recent weeks on news of escalating tension in Syria. Gold prices fell as the Fed meeting neared and as investors watched Russia and the United States try to hash out a deal to disarm Syria of its chemical weapons and prevent military strikes.

The price of silver tumbled 5.4 percent. <GOL/>

Gold-mining shares recorded the biggest single-day percentage fall in more than three months. They are down 42 percent so far this year.

"They have had a terrible ride," said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services. "The problem is I can't figure out what the price of gold is going to be a year from now. Nobody can."

"It's a cyclical trading investment, and right now it's going to be out of favor," he added.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 124.37 points, or 0.97 percent, at 12,701.05, after dropping as low as 12,693.86, its lowest level since September 4.

All of the 10 main sectors on the index were in the red.   Continued...

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. The Toronto Stock Exchange's main index fell sharply early on Friday with all sectors rattled by sinking commodity prices and news that another big U.S. bank had been burned by this year's credit crisis. REUTERS/Mark Blinch (CANADA) - RTX5U6