Toronto - Gold prices have declined sharply in recent sessions, weighing on Canadian mining shares, though the broader S&P/TSX Composite Index remains modestly positive for the year after a rebound on March 23.
According to Reuters coverage of TSX trading, the index gained 1.8 percent on Monday, recovering part of the previous week’s losses.
Gold retreats from January peak
Spot gold traded near C$6,060 per ounce on Tuesday, down from a January high of about C$7,345, based on historical pricing data from Exchange-Rates.org gold price series. This represents a decline of roughly 17 percent in Canadian dollar terms.
In U.S. dollar terms, gold traded near US$4,400 per ounce, after touching a four-month low of US$4,098 earlier in the week. Prices remain more than 20 percent below the January record of US$5,594.82.
Mining shares under pressure
Gold’s decline has weighed heavily on mining equities. Earlier in the selloff, the materials sector on the TSX dropped more than 5 percent in a single session, with gold miners falling about 6 percent.
U.S-listed mining stocks have also been volatile. The NYSE Arca Gold Miners Index fell sharply during the downturn and gave up earlier gains, reflecting sensitivity to both gold prices and broader risk sentiment, according to Bloomberg market coverage.
Strong fundamentals contrast with falling share prices
Despite weaker share prices, major Canadian producers reported strong financial results for 2025.
Kinross Gold generated a record US$2.5 billion in free cash flow and increased its dividend by 14 percent, according to its official 2025 results release.
Barrick Mining Corporation reported US$3.87 billion in free cash flow, up 194 percent year over year, and ended 2025 with US$2.0 billion in net cash, based on its quarterly and annual results.
Analysts note that mining companies face pressure from both lower gold prices and higher energy costs, which can compress margins during periods of market stress.
Liquidity pressures outweigh safe-haven demand
Gold’s decline amid geopolitical tension has surprised some investors, given its traditional role as a safe-haven asset. However, analysts say the pattern is consistent with past episodes in which liquidity needs dominate short-term price action.
According to Standard Chartered and the World Gold Council, forced selling and portfolio rebalancing can temporarily push gold lower even during periods of elevated risk.
The World Gold Council also noted that recent market behavior resembles earlier periods of stress, such as 2008 and 2020.
Gold-backed exchange-traded funds have seen outflows of approximately US$7.9 billion (about 54.8 metric tons) since the start of the current geopolitical conflict, primarily in the United States.
Currency effects for Canadian investors
Movements in the Canadian dollar have partially offset gold’s decline for domestic investors. A weaker loonie increases the Canadian-dollar price of gold, even when U.S.-dollar prices fall. The Canadian dollar recently touched a two-month low before stabilizing.
In Canada, certain investment-grade precious metals may be exempt from GST and HST under federal tax rules, though capital gains tax can still apply on profits. Details are outlined by the Canada Revenue Agency.
Several Canadian financial institutions, including TD Bank, CIBC, and BMO, offer precious metals products or bullion-related services through dedicated platforms.
Outlook remains constructive despite volatility
Some analysts maintain a positive longer-term outlook for gold despite recent volatility. According to JPMorgan forecasts, the bank expects gold prices to reach US$6,300 per ounce by the end of 2026, reflecting ongoing demand amid economic uncertainty.
Analysts at the World Gold Council have also suggested that while liquidity-driven selloffs can occur, underlying demand for gold as a store of value remains intact over longer time horizons.
Latest prices
As of Tuesday afternoon, spot gold traded near C$6,060 per ounce in Canadian dollar terms and approximately US$4,400 per ounce in U.S. dollar terms.
