TORONTO (Reuters) - Canadian gold stocks soared on Thursday, with top producers such as Barrick Gold and Kinross Gold setting all-time highs as bullion prices hit record levels.

Gold companies tracked by the TSX global gold index <.SPTTGD> surged 3.3 percent, touching their highest levels since May 2006, as spot gold prices pushed as high as $869 an ounce.

The stocks move follows a 7.6 percent rise on Wednesday, when gold pushed past its previous high of $850 set in 1980.

Barrick, the world's top gold producer, was up 5.4 percent at C$48.09 on the Toronto Stock Exchange at mid-afternoon on Thursday, while Kinross gained 2.4 percent to C$20.48.

Other prominent Canadian players were also stronger, as Yamana Gold , which has built itself into a top mid-tier producer through acquisitions, climbed 6.3 percent to C$14.60, while Goldcorp was up 3.6 percent at C$37.64.

This week's gain follows a year in which gold stocks underperformed a 31 percent rise in bullion prices, in part due to worries about rising input costs for miners, and also on skepticism about whether the metal's price could maintain its lofty levels.

But sentiment appears to be shifting, market watchers say.

Kerry Smith, an analyst at Haywood Securities, said speculative money had been largely active in other sectors such as uranium or chasing takeover premiums, but may now be coming back to the gold sector.

As well, costs of steel and some chemicals used by miners have steadied.

"I think we're getting to the point where the margins are starting to expand for these companies because the gold price is getting high enough and the cost pressures are starting to moderate somewhat," he said.

Analysts said gold prices were being helped by safe-haven investment flows, as higher oil prices sparked fears of higher inflation and slower U.S. growth.