Canadian Precious Metals Market Shaken as TSX Declines Nearly 3% on Fed Leadership Shift

The Canadian stock market faced significant headwinds on Friday, with the S&P/TSX Composite Index plunging 969.50 points or 2.94% to settle at 32,046.63. The selloff was primarily triggered by a dramatic collapse in precious metals prices, which rippled through the broader market and particularly devastated the materials sector. The decline underscores the sensitivity of Canada’s equity market to precious metals performance, especially given the country’s substantial mining industry exposure. For investors focused on precious metals ETF Canada strategies, the day’s movements offered a stark reminder of the volatility inherent in commodities-linked investments.

Precious Metals Prices Collapse Following Warsh Appointment

The catalyst for the precious metals rout came from an unexpected announcement: U.S. President Donald Trump nominated former Federal Reserve Governor Kevin Warsh to succeed Fed Chair Jerome Powell. Warsh is widely regarded as having a more hawkish stance on inflation compared to Powell, with a notable historical opposition to quantitative easing policies. This positioning suggests the market expects a potentially stronger U.S. dollar environment ahead, which typically pressures precious metals denominated in dollars.

The impact on precious metals was severe. Gold prices plummeted approximately 7%, while silver suffered an even steeper decline, dropping more than 18%. Market analysts attributed the sharp decline partly to profit-taking, given that both metals had experienced a historic surge over the preceding weeks. The precious metals ETF Canada market reflected these broader commodity price movements, with significant outflows as investors reassessed their positions.

Materials Sector Bears Brunt of the Market Correction

The Materials Capped Index, which heavily weights precious metals miners and exploration companies, experienced near-freefall, declining almost 8% on the day. The sector-wide selloff was indiscriminate in severity. Major precious metals producers and explorers posted particularly sharp losses: New Gold, Aya Gold & Silver, Discovery Silver Corp., Silvercorp Metals, Torex Gold Resources, First Majestic Silver Corp, Alamos Gold, Endeavour Silver Corp, Centerra Gold, and Lundi Gold Inc. each plunged between 10% and 13%.

The breadth of the materials sector decline demonstrates how interconnected Canada’s equity markets are with precious metals fundamentals. Investors with exposure to precious metals ETF Canada instruments or direct equity positions in mining companies faced substantial losses as the sector-wide repricing unfolded.

Technology Stocks and Broader Market Pressures

Beyond the materials sector, technology stocks also contributed to the market’s overall decline. Dye & Durham tumbled 10%, while Sylogist, Shopify, and Bitfarms retreated 5.4%, 5%, and 3.3% respectively. Additional tech sector weakness appeared across Kinaxis, Computer Modelling, Coveo Solutions, Lightspeed Commerce, Tecsys, Celestica, and Blackline Safety Corp, all posting significant declines.

Industrials, energy, consumer discretionary, and financial stocks similarly experienced sharp losses, indicating the selloff extended well beyond materials and technology. The broad-based nature of the decline suggested systemic factors—namely the Warsh appointment and its implications for U.S. monetary policy—were weighing on investor sentiment across multiple sectors.

Corporate News and Economic Data

OR Royalties Inc. shares also faced pressure following a separate development: the company announced the immediate resignation of William Murray John from his director role, contributing additional downward pressure on the stock.

On the economic front, Statistics Canada released preliminary data showing the Canadian economy expanded by a modest 0.1% month-over-month in December 2025. This tepid growth reading, combined with the precious metals market turbulence and shifting expectations around U.S. Federal Reserve policy direction, painted a picture of an uncertain economic environment that investors appeared eager to exit on Friday.