Gold stocks are losing their appeal as a safe haven for investors as economic reports continue to paint a picture of a strengthening recovery south of the border, hurting Canada's commodity-heavy benchmark indexThe S&P/TSX composite index fell for the third straight session on Thursday, losing 84.32 points, or 0.63 per cent, to close at 13,311.67. Six of the 10 sub-indexes dropped, with energy and materials leading the decliners.
"There's a total collapse in the large-cap gold stocks," Barry Schwartz, a money manager at Baskin Financial Services Inc. in Toronto, told Bloomberg. "Those that viewed gold as an alternative currency to the U.S. dollar may be heading toward the exits on the back of expectations for big job growth. We've turned the tide in job creation both in the U.S. and Canada."
Gold was also down for a third day, losing $2.00 US to close at $1,371.70 US an ounce. The price of crude oil closed at $88.38 US a barrel on the New York Mercantile Exchange, a loss of $1.92 US.
Commodities lost ground as the U.S. dollar strengthened on positive employment news —a report from the U.S. Labor Department on Thursday showed initial jobless claims were up 18,000 to 409,000 last week, in line with economists' expectations. The average over the past four weeks was 410,750, the lowest its been since July 2008. This came on the heels of a report from ADP Employer Services earlier this week that showed private payrolls in December increased nearly three times more than expected.
Figures to be released by Statistics Canada on Friday are expected to show employment rolls grew by 20,000 in December.
"It's hard to imagine commodities are going to go that much higher," Schwartz said. "It's possible people overreacted to the growth that's expected."
Energy and gold producers both lost ground on Thursday. Suncor Energy fell 2.88 per cent to $37.14 and Canadian Natural Resources saw its shares fall 3.03 per cent to $42.95. Barrick Gold Corp. shares slipped 1.5 per cent to $49.07 and Goldcorp was down $2.28 per cent to $42.94.
The Canadian dollar slid but remained above par at 100.31 cents US, losing just five basis points.
Markets in the U.S. were mixed, with the Dow Jones industrial average losing 25.58 points or 0.22 per cent to 11,697.31, and the Nasdaq composite closing up 7.69 points, or 0.28 per cent, to 2,709.89.
Valeant Pharmaceuticals was a bright spot on the TSX on Thursday, gaining 18.76 per cent to $35.45 after forecasting robust fourth-quarter and full-year earnings.
Potash Corp. of Saskatchewan Ltd. gained for the eighth straight day, advancing 4.46 per cent to reach its highest point since September 2008 — $168.70.
