Canada’s TSX Composite Index has had a great performance this year, as it outperformed the S&P 500 and Nasdaq 100 indices. It jumped by ~30% this year, while the two blue-chip indices rose by 20.5% and 16.5%, respectively.
TSX Composite Index boosted by soaring commodity prices
The TSX Composite Index soared to a record high this year despite the trade conflict between the United States and Canada. This conflict saw the US implement large tariffs against Canadian goods not covered by the USMCA deal, which he negotiated in his first term.
The main reason why the index did so well is that it is made up of many companies in the gold and silver mining industries, which have benefited as the prices jumped to a record high.
Index, a closer look at its top gainers shows that they are all in this industry. Discovery Silver Corp’s stock jumped by 1,777% as the price of silver soared.
READ MORE: Top 5 reasons gold price is on a relentless bull run
Aris Mining, G Mining, Lundin Gold, New Gold, Oceanagold, DPM Metals, and Allied Gold Corporation stocks jumped by over 230% this year, and were the best performing in the index.
The other top companies in the index were firms like IAMGOLD, Visla Silver Corp, Silvercorp, and Barrick Mining Corporation.
Gold and silver prices jumped for three main reasons. First, Donald Trump’s policies pushed investors to embrace safe-haven assets like gold and the Swiss franc.
Second, gold experienced strong demand from both countries and companies, with Tether leading the acquisition spree. Countries like China and Russia continued buying gold as part of their diversification strategy. Silver jumped because of its close correlation with gold.
Third, the gold and silver jumped as investors reacted to the actions of the Federal Reserve, which slashed interest rates three times this year, and most recently, it restarted its quantitative easing policy. Officials have hinted that the bank will cut rates in 2025.
Bank of Canada interest rate cuts
The TSX Composite Index jumped as the Bank of Canada (BoC) slashed interest rates several times this year, bringing the benchmark rate to 2.5% as inflation dropped to its target range. The cuts helped to boost the economy, which expanded by 2.3% in the third quarter of the year.
Still, Canada’s bond yields have held steady in the past few months, a sign that analysts expect the bank to hold rates steady. The yield of the ten-year government bonds jumped to 3.50%, its highest level since September this year. It has risen by over 14% from its lowest level in October.
The TSX Composite Index has done well because of the ongoing AI boom, which has helped boost some of its constituent companies. For example, companies like Bitfarms, Shopify, and Celestica.
Will the TSX Index continue soaring in 2026?
The TSX Composite Index’s performance in 2025 will depend on the performance of gold, silver, and other metals. A continuation of this year’s rally will boost these mining stocks. However, chances are that silver and gold will moderate next year.
Technical analysis suggests that the index has momentum today. It has remained solidly above the 50-day and 100-day Exponential Moving Averages, which have provided it with substantial support.
The Relative Strength Index has continued rising and is nearing the overbought level of 70. Therefore, the most likely scenario is where it continues rising, with the next key resistance level being at $32,500.
However, a pullback cannot be ruled out in the coming year, especially if gold and silver prices drop.
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