MW Gold hasn't outperformed stocks by this much since 2022. Here's what that means for investors.

By Myra P. Saefong

The S&P 500 has declined as gold futures reached record highs

U.S. stocks have seen a disappointing performance so far this year, while gold prices have climbed to fresh record highs above $3,000 an ounce, but the performance spread between these two asset classes suggests a change in the months to come.

Over the last three months, the S&P 500 SPX has underperformed gold futures (GC00) (GCJ25) by minus 24%, the widest margin since March 2022, a period that was marked by stock-market stress and demand for safe-haven assets, wrote Dean Christians, senior research analyst at SentimenTrader, in a recent note.

As the S&P 500 declined and gold futures climbed, that widened the three-month rate spread between the two "typically uncorrelated asset classes" to its "most significant gap in over two years," Christians said. A spread reading below minus 24% has only occurred 5% of the time since 1970.

An analysis of the two asset classes can help determine whether the current pullback in stocks is a "routine correction within a bull market or the start of a more meaningful shift toward a bear market," Christians said.

Read: Gold has already topped $3,000. Here's what it needs to go up another 16%.

Historically, such divergences have reflected "heightened trader pessimism and often signaled a bottoming process and subsequent relief rally in stocks over the next few months," he said.

Whenever the three-month rate-of-change spread between the S&P 500 and gold futures has dropped below minus 24%, the key benchmark equity index "displayed a slightly unfavorable outlook over the subsequent few weeks, suggesting a choppy bottoming process," he said.

Once the dust settled, the large-cap index has rallied 65% of the time over the following two months, "with a return that approached significance relative to random performance," Christians said.

Gold, after a minus 24% spread change relative to stocks, is likely to face pressure over the first few months, suggesting that traders are "less inclined to maintain positions in a safe-haven asset like gold," he said.

Should stocks stage a rebound, gold, a safe-haven asset, could "face near-term pressure and consolidate within its long-term uptrend," he said.

-Myra P. Saefong

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March 21, 2025 13:29 ET (17:29 GMT)

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