Why gold beating stocks’ might not be a good sign,’ according to strategist
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The 2024 gold price rally, which has coincided with the growth of the S&P 500 index, could be signaling a concerning trend as markets witness a shift in investor interests. Since early 2022, gold has gained nearly 50%, compared to a 40% rise in the S&P 500 Total Return Index and a 20% drop in crude oil. These trends suggest that the market may be increasingly wary of overvalued stocks and global instability, especially given that gold has risen during heightened geopolitical tensions, Bloomberg Intelligence commodity strategist Mike McGlone noted in an X post on November 9. According to McGlone, the elevated ratio of U.S. stocks to GDP is a key factor contributing to gold’s resilience, even as the stock market has soared in an artificial intelligence-driven bull run. Historically, high stock-to-GDP levels have aligned with periods where gold outperformed stocks. U.S. stocks to GDP chart. Source: Bloomberg Intelligence “The Rock Beating Stocks Might Not Be a Good Sign – Gold’s on-par performance with the S&P 500 the past three years may suggest it’s gaining an upper hand vs. the AI-driven stock market,” McGlone said. The expert observed a notable shift in geopolitical space in February 2022, when China and Russia declared an “unlimited friendship,” Since then, global risks have intensified, building on the metal’s traditional role as a hedge against periods of uncertainty. At the same time, the recent gold record highs have partly been influenced by growing geopolitical tensions in the Middle East, which pit Iran and Israel. What next for gold Gold has reached new highs, targeting the $3,000 resistance level, which some analysts project could be achieved by 2025. However, following Donald Trump’s re-election, the yellow metal has retraced, testing the $2,600 support zone. Gold one-month price chart. Source: TradingView In an earlier post, McGlone noted…
Filed under: News - @ November 10, 2024 11:20 am