Despite ongoing trade tensions and a weakening economy, Canada’s main stocks benchmark outshone its US counterpart in the first half thanks to a record-breaking gold rally.

The S&P/TSX Composite Index climbed 8.6% for the year to June 30, higher than the S&P 500’s 5.5% advance over the same period. In US-dollar terms, the Toronto index was up 15%, mirroring the gains of other gold-heavy world indexes.

“No doubt that it’s been driven by gold,” said Sadiq Adatia, chief investment officer at BMO Asset Management Inc. Investors rushed into gold and precious metals miners to hedge some of the risks caused by US President Donald Trump’s tariff threats as well as geopolitical tensions and conflicts in the Middle East. That rush benefited the Toronto stocks gauge.

“You need to have things that can bulletproof your portfolio, and gold is the one that does that the best,” Adatia said.

Gold and silver stocks drove half of the gains in the S&P/TSX Composite Index through June 18, an “exceptional” run that was “driven by heightened uncertainty surrounding US tariffs and their potential impact on economic growth,” Bank of Nova Scotia analyst Simon Fitzgerald-Carrier wrote in a note published that day.

Four of the 10 biggest gainers through the first half of the year were precious metals stocks, including Agnico Eagle Mines and Wheaton Precious Metals. Moreover, most of the top 10 performing stocks in the index are precious metals miners, led by Lundin Gold Inc.’s nearly 135% climb.

The question now is whether the gold-led rally will fade, after prices for the metal declined at the end of June as both geopolitical and trade risks waned.

“I don’t think gold is going to have the same run in the second half that it had in the first half because a lot of the ambiguity and the uncertainty that we were facing earlier on has subsided,” BMO’s Adatia said.

Revenue forecasts for S&P/TSX members have slipped “notably” since April, and the index’s large exposure to the “struggling energy sector is disproportionately weighing on overall forecasts,” Bloomberg Intelligence strategist Gillian Wolff wrote in a June 11 note.

Still, Lesley Marks, chief investment officer of equities with Mackenzie Investments, points to growth opportunities for Canadian stocks beyond the gold story. Global investors are putting money into the TSX because of its heavy weighting toward materials, energy and financials, she said.

And Canada’s new Prime Minister Mark Carney is “championing a very pro-investment, pro-growth and economically focused” mandate, Marks said.

She added that the S&P/TSX Composite is trading at a 17x price-to-earnings ratio, much lower than the S&P 500’s 24x valuation.

“I think that there is a fundamental story around Canadian stocks because of policy changes from our government, but also a valuation story,” Marks said.