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“That to me is the single most important reason why Canada has played such catch-up and has actually done better than the S&P 500, certainly this year so far.�

The TSX was up roughly 11 per cent year-to-date, as of Wednesday afternoon, while the S&P 500 was up about eight per cent, according to LSEG Data & Analytics.

Meanwhile, the price of gold has risen about 30 per cent over the course of the year so far, with the August gold contract hovering around US$3,400 an ounce. 

Dennis da Silva, senior portfolio manager at Middlefield, agreed that the gold sector is “the largest contributor� in driving the TSX higher.

“If you look at the S&P/TSX global gold index, that's up 40 per cent year-to-date. So if you tie that into the TSX, I would say about 30 per cent of the index's return is driven by gold and silver names or precious metals in general,� he said in an interview last week.

In contrast, U.S. markets have been primarily driven by large-cap technology companies in recent years that “pushed forward that U.S. exceptionalism story,� said Chris McHaney, head of investment management and strategy at Global X Investments Canada.

“I won't say it's run out of steam, but it has started to look like some of those drivers are starting to slow down in terms of the amount of growth that's being provided to the U.S. market,� he said.

McHaney noted the performance of the so-called magnificent seven group of stocks has been split this year. The magnificent seven is a group of large-cap U.S. tech stocks that have a major influence on equity markets. The list includes Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia and Tesla.

For example, Tesla shares are down nearly 20 per cent year-to-date; meanwhile, Alphabet shares are flat. On the flip side, Nvidia and Microsoft shares are up roughly 27 per cent and 20 per cent, respectively, since the start of the year. 

The mixed picture has helped Canada's more metal-focused index gain, said McHaney. 

“It really is more of a story of gold has been on fire and in Canada, we just have more exposure to that,� he said.

According to da Silva, there are a few reasons why gold prices have risen, one being that the commodity benefited from demand for safe haven assets, particularly as the global trade dispute flared up. 

Stock markets have been volatile this year, particularly in March and April, when U.S. President Donald Trump started rolling out tariffs on countries around the world, only to delay many. The uncertainty over how the global economy and company profits would be impacted by changing trade policies has driven investors to safe haven assets like gold. 

McHaney said there are a few factors that influence the price of gold — government deficits around the world, inflation concerns and trade uncertainty tend to be positive ones — but it can be difficult to assess which is driving price moves at a given time.

Central banks around the world were also buying more of the key commodity as another source of reserve currency, da Silva said. 

He noted this trend became more common after the U.S. and European Union froze Russian assets after it invaded Ukraine.

“I think that was kind of a wake-up call that your assets are not safe. They can be frozen, and that caused countries to re-evaluate how they hold foreign reserves. I think at that point that's when we started to see pretty active buying,� da Silva said. 

Going forward, da Silva said he would be “hard pressed� to say gold is likely to continue appreciating at the pace it has over the past three years unless large-scale economic or geopolitical disruptions were to occur.

However, he said investors could still likely benefit from investing in gold companies.

“I don’t think it's too late … I think history always shows if it's a fundamentally strong sector. That is, they focus on costs and profitability per share. That's an industry that can make good money over time,� da Silva said.

While McHaney said it is difficult to determine whether the TSX will continue to outperform the S&P 500, he said he also doesn’t think retail investors have missed the boat in terms of investing in gold specifically. 

“I think some of those drivers that have been working well for Canada are not necessarily going away tomorrow either. There could be a psychological element of maybe 'I missed that performance, I'll just stay where I am,'" he said.

“We think gold itself might not keep rising in value, but it just has to stay kind of where it is now for the gold equities to continue to do very strongly.� 

This report by °µÍø½ûÇø was first published July 24, 2025. 

Companies in this story: (TSX:GSPTSE)