Precious Metals Selloff Triggers Broad Decline in Canada's Stock Market, TSX Falls Nearly 3%

Canada’s stock market absorbed a significant blow this week as precious metals prices experienced a sharp selloff, dragging down the benchmark S&P/TSX Composite Index by 969.50 points—a decline of 2.94% to close at 32,046.63. The sell-off cascaded through multiple sectors, particularly impacting the materials industry where miners and metals producers faced intense profit-taking pressure. The broader market weakness also caught up technology stocks, which suffered their own losses as investors reassessed growth valuations in an environment shifting toward higher interest rates.

The Federal Reserve’s Hawkish Turn Weighs on Precious Metals

The catalyst for this market correction stems from a significant policy signal: U.S. President Donald Trump’s announcement that he is nominating former Federal Reserve Governor Kevin Warsh to succeed Fed Chair Jerome Powell. Warsh’s historical stance of opposing quantitative easing and taking a firm line on inflation control suggested to markets that a stronger U.S. dollar environment lies ahead—a particularly bearish development for precious metals investors. Gold prices plummeted nearly 7%, while silver experienced an even steeper correction, losing more than 18% as investors liquidated positions following weeks of substantial gains. For Canada’s precious metals ETF investors, these price swings translate directly to portfolio pressures, especially given the sector’s concentration in junior and mid-tier mining companies.

Materials Sector Bears the Brunt of Metals Selloff

The Materials Capped Index collapsed nearly 8%, with individual mining stocks experiencing double-digit declines. New Gold, Aya Gold & Silver, Discovery Silver Corp., Silvercorp Metals, and Torex Gold Resources all fell 10%-13%, alongside First Majestic Silver Corp, Alamos Gold, Endeavour Silver Corp, Centerra Gold, and Lundi Gold Inc. This broad-based weakness underscores the sector’s vulnerability to precious metals price movements—a key consideration for Canada’s mining-exposed investment portfolios.

Tech Sector Adds to Market Pressure

Beyond the materials space, technology stocks extended losses across the board. Dye & Durham tumbled 10%, while Sylogist, Shopify, and Bitfarms declined 5.4%, 5%, and 3.3% respectively. Kinaxis, Computer Modelling, Coveo Solutions, Lightspeed Commerce, Tecsys, Celestica, and Blackline Safety Corp all posted sharp declines. Industrials, energy, consumer discretionary, and financial stocks similarly faced broad-based selling pressure, suggesting investors adopted a risk-off posture across multiple asset classes.

Market Currents and Economic Backdrop

Additionally, OR Royalties Inc. shares declined sharply following the resignation announcement of William Murray John from his director position, effective immediately. Meanwhile, official data from Statistics Canada revealed that Canadian GDP expanded by just 0.1% from the previous month in December 2025, according to advance estimates—a modest growth rate that may further dampen investor appetite for risk in the coming weeks.