The TSX Composite Index continued its strong bull run this year and is now hovering at its all-time high. It rose to a record high of $33,145, making it one of the best-performing indices globally. 

The blue-chip index, the TSX Index, rose by 32% in the last 12 months, beating the Nasdaq 100, which has jumped by 18.75% in this period. Also, the S&P 500 Index has jumped by 14.3%.

TSX Composite Index to react to Bank of Canada decision and gold prices 

The TSX Index will be in the spotlight this week as investors focus on the upcoming Bank of Canada (BoC) interest rate decision, which will happen on Wednesday this week.

Economists expect the central bank to leave interest rates unchanged at 2.25% in this meeting. A recent poll by Reuters found that rates will remain at this level this year as Canada’s economy has done well.

The most recent data showed that the economy expanded by 2.6% in the third quarter, while the labor market continued improving despite the ongoing jitters between the US and Canada.

Canada’s bond yields have continued rising in the past few weeks as traders waited for the upcoming BoC interest rate decision. The ten-year yield rose to 3.415%, while the five-year rose to 2.95%.

The TSX Composite will also react to the potential trade war between the United States and Canada. Donald Trump’ threatened to impose a 100% tariff on all goods coming from Canada in protest for a recent deal between the country and China. 

Canada lowered tariffs for electric vehicles imported from China from 100% to 6%, while China removed tariffs for Canada’s canola. 

A 100% tariff and retaliation from Canada would have a major implication for companies in the TSX Composite, which count the United States as their biggest customer. 

However, on the positive side, Canada’s Mark Carney has said the country was not working on a free trade deal with China. Most importantly, market participants are anticipating that TACO will happen.

TACO stands for Trump Always Chickens Out, a phenomenon where he makes big claims and then caves. For example, Trump was fixated on the Greenland issue for weeks, only for him to come up with an underwhelming deal at the World Economic Forum last week.

The other important catalyst for the TSX Composite Index is the ongoing previous metal rally. Gold price jumped to a record high of $5,000 on Monday, while silver has moved above the key resistance level at $100. 

The soaring precious metal price surge is a bullish thing for the index because many of its constituent companies are in the industry. SilverCorp Metals stock has jumped by 50% this year, while First Majestic, Endeavour Silver, New Gold, Denison Mines, Discovery Silver, and Aya Gold & Silver have soared by 34%. All these companies have jumped by triple digits in the last 12 months.

Some major companies in the TSX Composite Index will publish their financial results this week. The most notable ones are companies like Metro, CGI, Rogers Communications, Canadian National Railway, and Imperial Oil.

TSX Index technical analysis 

TSX Index chart | Source: TradingView 

The daily timeframe chart shows that the TSX Composite Index has been in a strong uptrend in the past few months. It has jumped above all moving averages, while the Relative Strength Index (RSI) and the MACD have continued rising.

Therefore, the most likely TSX Index forecast is bullish, with the next key resistance level to watch being at $34,000. A drop below the key support at $32,500 will invalidate the bullish outlook.

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