Why Precious Metals and the Canadian Market Have Pulled Back Recently
Gold, silver and the Canadian market in decline: the reasons behind the recent pullback, and what it means for your investments.
Understanding last week’s decline
The appointment of Kevin Warsh to the U.S. Federal Reserve for May 2026 has increased confidence in the U.S. dollar.
In recent months, declining confidence in the U.S. dollar had boosted natural resources, mainly in Canada, notably with a sharp increase in the price of gold.
Many of you have noticed the recent sharp decline in precious metals (gold, silver) as well as the pullback in the Canadian stock market.
Here is a simple, clear summary of what happened — and above all, what it means for your investments.
What triggered this decline
In late January, markets reacted to the appointment of Kevin Warsh as the future chair of the U.S. Federal Reserve (the central bank of the United States).
Why does this matter?
Because the Federal Reserve influences:
- interest rates,
- the strength of the U.S. dollar,
- and, by extension, the prices of commodities such as gold and silver.
The market sees Mr. Warsh as someone who:
- wants to keep inflation under control,
- and who could keep rates higher for longer.
This perception drove a rise in the U.S. dollar, which put strong downward pressure on precious metals.
Why gold and silver fell so sharply
Several factors came together at the same time:
- Precious metals had risen considerably in 2025 (some very quickly).
- With a stronger U.S. dollar and expectations of higher rates:
- gold, which pays no interest, becomes less attractive in the short term.
- Many investors therefore cashed in their gains, sometimes hastily.
The result:
- Gold: a marked decline within a few days
- Silver: an even bigger drop, amplified by forced selling
Why the Canadian market was hit harder than the U.S. market
The Canadian stock market is very different from that of the United States.
In Canada:
- a significant portion of the stock market is made up of:
- mining companies (gold, silver, metals),
- energy
- materials.
When precious metals fall sharply:
- mining stocks fall further than the price of gold itself
- and since these companies carry heavy weight in Canadian indexes: the entire Canadian market is affected.
In the United States, where the stock market is dominated by technology and services, the impact was much more limited.
Is this a sign of crisis or a change of cycle?
No.
It is important to understand that:
- this movement looks more like a correction after a strong rally,
- and a rotation between sectors, rather than a signal of financial crisis.
Historically:
- periods of volatility in metals;
- can be followed by stabilization,
- and can sometimes even create long-term opportunities in solid companies.
What we are watching going forward
In the coming months, our attention is focused in particular on:
- the evolution of interest rates in the United States and Canada,
- the stability of the U.S. dollar,
- and the possible rotation toward other sectors such as:
- banks,
- insurance companies,
- and certain defensive sectors.
Your portfolio is built to weather this type of fluctuation, with a diversified approach aligned with your long-term goals.
Key takeaways
- The recent decline was rapid, but it can be explained by specific factors
- The Canadian market was hit harder because of its heavy exposure to natural resources.
- This is not an alarm signal, but a normal market adjustment.
- A disciplined, long-term approach remains the most effective.
The strength of a team
Since 2014, the Pérennité Gestion de Patrimoine team has supported its clients with rigour and commitment in reaching their financial goals. Drawing on our expertise in financial services, we do everything we can to offer suitable, lasting and well-thought-out solutions. Excellence guides each of our actions, but it is above all passion that drives our work every day.
Questions?
Do not hesitate to get in touch with a member of our team to discuss your portfolio’s positioning.
