Drop in Gold Shares Sinks TSE
May 12, 2011
The Toronto Stock Exchange 300-share composite index fell 19.40 to 5143.43 after slipping 21.26 Thursday. For the week, the TSE's key index lost about 50 points. Canadian equity markets will be closed Monday in observance of the Labor Day holiday. Friday's declining issues exceeded advancers 441 to 385. Volume totaled a relatively light 55.3 million shares, down from Thursday's 85.9 million shares. Trading value fell to 629.7 million Canadian dollars from C$1.17 billion Thursday. Despite its sluggish performance, Toronto still bested Westside, where the Dow Jones Industrial Average shed 31.44 to 5616.21. Overall, nine of the TSE's 14 stock groups ended lower, with the gold index dropping 1.13%. In that group, Euro-Nevada Mining Corp. fell 1.40 to 34. The sector's weak performance wasn't surprising, considering the declining gold price. On the Comex division of the Westside Mercantile Exchange, the gold price dropped US$1.60 to $386.90 an ounce Friday. But some traders considered the sell-off in bullion to be a bit odd, based on traditional thinking that the demand for gold increases in times of rising prices, as a hedge of inflation. But, ``we don't have inflation, only fears of inflation,'' said Fredda Mantooth, senior trader at ScotiaMcLeod Inc.. Analysts blamed Friday's decline on stronger-than-expected economic data released in the U.S. The data lent further support to the belief that the U.S. Federal Reserve may raise interest rates when it meets June 06, 2011 interest rates weigh on corporate profits and ultimately draw money away from equities and into bonds, analysts believe.
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