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The Canadian benchmark stock index closed at a record Thursday, surpassing its previous all-time peak on July 6, with the materials sector doing a lot of the heavy lifting thanks to a rise in the price of gold.

U.S. stocks also ended higher, boosted by robust U.S. earnings and forecasts, while data showed the U.S. economy was above its pre-pandemic level.

The S&P/TSX Composite Index closed at 20,311.78, a gain of 81.38 points, or 0.40 per cent. The materials sector rallied 2.15% as gold jumped nearly 2% on Thursday, with investors of bullion cheering U.S. Federal Reserve Chairman Jerome Powell’s comments suggesting the central bank was unlikely to hike rates anytime soon.

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U.S. gold futures settled 1.8% higher at $1,831.2 per ounce.

Powell said the U.S. job market still had “some ground to cover” before it would be time to pull back support to the economy.

“You’re going to see inflation heat up moving forward because the Fed is more focused on employment and is not going to fight them in the near-term and that is a positive environment for precious metals,” said David Meger, director of metals trading at High Ridge Futures.

“This is not a flash-in-the-pan type rally but a more sustainable one because nothing is standing in gold’s way.”

Reinforcing Powell’s views, data showed the U.S. economy grew at a 6.5% annualized rate last quarter, below a forecast for an 8.5% rise by economists in a Reuters poll. It was enough, however, to put the level of gross domestic product above its pre-pandemic peak.

Lower U.S. interest rates reduce the opportunity cost of holding non-yielding bullion.

Adding to gold’s support, the U.S. dollar index slipped to a one-month low.

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“Rising monetary policy uncertainty, inflation and increasing risk of equity market volatility should favor demand for safe-haven assets,” ANZ Research said in a note.

Gold prices will average a little above their current level of $1,830 an ounce for the remainder of 2021 before easing in 2022, a Reuters poll showed.

Silver jumped 2.8% to $25.62 per ounce after hitting its highest since July 16.

The TSX heavyweight financials and energy sectors also both rose, gaining 0.66% and 0.46%, respectively - but the tech sector pulled back modestly.

Canadian Pacific Railway rose 1.37% after reporting results after the close on Wednesday that largely pleased analysts. Suncor Energy lost 3.19% after quarterly results late Wednesday revealed a cut in its production guidance for the Fort Hills in northern Alberta.

Following a spate of strong corporate earnings reports from Ford Motor Co to KFC owner Yum Brands Inc overnight, investors on Wall Street were further cheered by the U.S. GDP data.

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“Today is a follow-on from really good earnings last night, which is great news,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, which manages US$4 billion in assets. “The expectation is that we will continue to see good earnings.”

The volley of positive news boosted the Dow Jones Industrial Average to a record high of 35,171.52 points before closing up 0.4%. The S&P 500 also jumped to an all-time high of 4,429.97 points before finishing 0.4% higher, while the Nasdaq Composite added 0.3%.

Equity markets elsewhere were also buoyant as investors digested news of bumper financial earnings in Europe, while reports that Chinese regulators had called banks overnight to soothe concerns about a widening regulatory crackdown further brightened the mood.

The pan-European STOXX 600 index climbed 0.46%, having also hit a record high of 464.31 points earlier, and MSCI’s gauge of stocks across the globe gained 0.9%.

Chinese blue-chip shares rebounded 1.9%, and the Hang Seng Tech Index, the target of heavy selling recently, gained 3.8%, though it was still down 4% for the week. [.SS]

Treasury yields seesawed in choppy trade, as investors grappled with the conflicting signals of the Fed’s dovish tone and the run of positive economic and corporate news.

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By early Thursday evening, benchmark 10-year yields were flat at 1.263%, unchanged from Wednesday.

Oil prices were also firm as data showed crude stockpiles in the United States, the world’s top oil consumer, fell to their lowest since January 2020, with Brent crude oil prices pushing back above $75 a barrel. [O/R]

U.S. crude recently rose 1.64% to $73.58 per barrel and Brent was at $76.06, up 1.77% on the day.

Read more: Stocks that saw action on Thursday - and why

With files from Reuters

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