On Thursday, Canada's main stock index TSX registered a small increase on strong U.S. corporate earnings and improved risk appetite in the midst of ongoing threats from a coronavirus pandemic.
Gold climbed to a near three-week high on Monday as growing concerns over the economic fallout of the coronavirus outbreak saw investors looking for safe havens. Spot gold was up 0.4% at $1,577.31 per ounce. Prices rose to $1,586.43, the highest level since Jan. 8, earlier in the session. U.S. gold futures settled 0.3% higher at $1,577.4 per ounce.
However, towards the middle of the week, gold prices as equities regained some ground. Spot gold was down 0.7% to $1,570.64 per ounce, having touched its highest since Jan. 8 on Monday. Gold futures were down 0.46% to $1,570.1.
Gold was able to stabilize as focus shifted away from the virus threat coming from China and towards fundamentals and particularly after some of the bellwether companies in the U.S. Markets were further supported Wednesday by the Federal Reserve, which announced that interest rates would remain unchanged due to a stable state of the economy.
Canadian junior gold mining stocks enjoyed a strong session with the largest gainer being Kinross Gold Corp. and Centerra Gold Inc. climbing at least 4.3 per cent. They rose along with gold prices as investors continued to seek safety.
The favorable conditions for gold prices also moved gold stock prices of the precious metal's publicly traded miners.
Over the past 12 months, when the TSX has hit record highs, holders of Canadian junior gold stocks benefitted a lot from the rally in the gold price as they were rewarded with impressive returns.
At the close in Toronto on Thursday, the S&P/TSX Composite fell 0.10%.
The biggest gainer of the session on the S&P/TSX Composite was OceanaGold Corporation (TSX:OGC), which rose 11.93% or 0.290 points to trade at 2.720 at the close. Gold Futures for February delivery were up 0.18% or 2.80 to $1573.20 a troy ounce.
All of this is an indication that the main trend in gold prices remains bullish. The short-term correction seen in the last few weeks is seemingly over, which increases the chance of the price achieving a new 7-year-high in the next few weeks.
Investors are looking forward to the price of gold breaking free from the January mid-cycle consolidation and resuming its uptrend. Overall, precious metals should continue higher into March, potentially peaking with the coronavirus outbreak. A multi-week correction into the next 6-month low and subsequent buying opportunity is to be expected.