Jan 16 (Reuters) - Canada's main stock index fell on Tuesday, with the market giving back some recent gains as a drop in commodity prices pressured resource shares and domestic inflation data tempered hopes for an early interest rate cut by the Bank of Canada.
The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE), opens new tab ended down 113.79 points, or 0.5%, to 20,948.09. Last week, it notched a 20-month high at 21,074.91.
"The base case is this is a little bit of indigestion after a strong move," said Joseph Abramson, co-chief investment officer at Northland Wealth Management.
"I think after the pullback we will hit new highs. The reason for that is you have a nice combination of accelerating earnings growth and the potential for declining interest rates."
Canada's annual inflation rate rose to 3.4% in December. That was expected but an acceleration in underlying price pressures spooked some investors.
Money markets see a one-in-three chance that the Bank of Canada will shift to rate cuts in March, down from nearly 50% before the data, but stuck with bets for the first cut in April.
The energy sector fell 3.1% as the price of oil settled 0.4% lower at $72.40 a barrel.
The price of gold also declined, falling 1.3%, while the materials group, which includes precious and base metals miners and fertilizer companies, lost 2.3%.
The move lower for commodity prices came as the U.S. dollar (.DXY), opens new tab jumped to its highest level in a month against a basket of major currencies.
Barrick Gold (ABX.TO), opens new tab slumped 8.8% after the company reported preliminary gold output of 4.05 mln ounces in the financial year 2023, below its forecast and analysts' estimates of 4.16 mln ounces.
The consumer staples sector provided some ballast, gaining 0.5%.
Reporting by Fergal Smith in Toronto and Shubham Batra in Bengaluru; Editing by Tasim Zahid and David Gregorio
