Canada's main stock index saw a dip on Thursday, as investors grow concerned over the economic impact of the coronavirus. As a result, Canadian junior gold miners benefited from safe-haven demand.
At 9:49 a.m. ET (1449 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 206.48 points, or 1.23%, at 16,573.05. The materials sector, which includes precious and base metals miners and fertilizer companies, added 0.2% on strength in gold and base metal prices.
Spot gold gained 2.2% to $1,671.78 per ounce. U.S. gold futures jumped 1.8% to $1,672.80.
The Bank of Canada was the latest to cut its benchmark interest rate to 1.25% from 1.75% in the face of a fast-spreading coronavirus outbreak. It is further prepared to cut again if needed to support economic growth.
The rising pressure on equity markets helped gold prices climb over 1% to a more than one-week high on Thursday. Viewed as a safe-haven, the yellow metal benefited from the raised hopes of further monetary policy easing by major central banks.
The International Monetary Fund announced on Wednesday the global spread had crushed hopes for stronger growth this year, and a Fed report showed there were signs the epidemic had begun to weigh on U.S. business sentiment.
Further supporting bullion, the dollar index slipped 0.5% to a near two-month low against a basket major of currencies, elsewhere, palladium dropped 3.6% to $2,484.86 per ounce. Gold futures for April delivery fell 0.2% to $1,663.80 an ounce as investors raised money to cover their margin calls in the stock market. The precious metal swung from a gain of 1.4% earlier.
The latest movements in the market were good news for junior gold miners. Canadian Orebodies has closed a private placement through the sale of common and flow-through shares, raising more than $1.1 million in financing, to continue exploration on its two massive gold properties in the Hemlo area.
Other junior gold miners were less successful as there is a large outflow of Chinese investors, especially at the gathering of prospectors and mine developers in Toronto and a bigger event in Chile scheduled for March 23rd.
Iamgold Corp was another gold miner who registered a winning session with gold stocks of the company up 6.4%.
Direxion Daily Junior Gold Miners Index Bear 3x Shares (NYSEARCA:JDST) dropped 15.6% during trading on Monday. The company’s 50 day moving average price is $10.18 and its 200 day moving average price is $13.24.
As markets continue to adjust to the rising threat of the outbreak of the COVID-19 coronavirus, investors are monitoring gold price movements with increasing interest.