I have the XBox App on my PC and want to gift a game to a friend but live in Canada. Games...

Nope, Canadian store. I think your app is the issue. Actually, I have a high degree of confidence. My son also tried installing it and had the same issue.

Sorry, I read your initial message wrong and thought you were in the US.

Have you tried purchasing through the website instead of the app as well?

Also, as far as other retailers, you can by digital codes through online retailers. That's what I was referring to.

The retailer is the XBOX app, on a Canadian computer in Canada from the Microsoft store, that one has to assume is Canadian. I also can't buy from a Canadian retailer because we have the good sense to be on lockdown as a result of COVID. Sorry, but your
answer makes no sense.

I don't work for Microsoft it's not my app, but yes, in this case it is an app issue and not an account issue. In your Windows settings, under Time & Settings make sure it has your region set correctly.

You shouldn't. That's why I asked if you had tried via the website to see if it automatically directed you to the US as well. If it does then there might be an issue with the region on your account.