Gold may be taking a dive, but that’s no indication Canada’s economy will go with it, according to the outgoing head of the Bank of Canada.
BoC Governor Mark Carney said this week’s plummeting gold prices aren’t necessarily an indicator of what we can expect for the global economy.
“You had a curious situation this week where there was an adjustment at a time when there was some surprise in economic data, so I would say that that’s more reflecting the specific market dynamics within that market,” Carney said at a press conference Thursday in Ottawa.
Gold futures in New York had a 9.3 percent drop April 15, the biggest decline for a most-active contract since March 17, 1980. Bullion lost ground as the U.S. recovery gained momentum, the dollar rose and Federal Reserve policy makers signaled they may scale back on stimulus, curbing demand for gold as a haven.
Carney, who takes over the Bank of England on July 1, said he doesn’t track gold prices much in his current job. While central banks have lost $560 billion from the value of their reserves as gold prices drop, the precious metal accounts for just $144 million of Canada’s $71.1 billion reserves.
For global growth prospects, “one would point to some of the base metals,” as better indicators than gold, he said, without identifying specific products. Heavy crude oil, natural gas and lumber were products he identified as among Canada’s most valuable exports.
With files from Bloomberg News.