Gold just wrapped up its biggest outperformance versus the U.S. stock market in 14 years, delivering returns dwarfing those from the S&P 500 for the fifth straight month in April.
The yellow metal’s 34% rally against the benchmark U.S. share index over the last five months is its largest over such a period since 2011. It’s also the longest monthly streak of gold outperformance since 2009, as persistent geopolitical risks and economic uncertainties related to President Donald Trump‘s trade tariffs drove investors toward the perceived safety of bullion.
The SPDR Gold Trust GLD, the largest gold-backed ETF globally, climbed 5.4% in April.
In contrast, the SPDR S&P 500 ETF Trust SPY, which tracks the benchmark U.S. equity index, slipped 0.9%. That resulted in a relative outperformance of 6.4% for gold in April alone.
Yet, in the final week of April and the first session of May, gold has given up some ground to equities, prompting traders to question whether this is a mere pullback in a bullish trend or the beginning of a shift in market leadership.
Seasonal Trends Paint A Murky Picture For Gold in May
Historical data doesn’t offer a clear answer.
Over the past 25 years, gold has recorded gains in May 12 times and losses in 13, with an average return of 0.6% and a median return of -0.3%, as Seasonax data shows. In short, May has been a coin flip for the yellow metal.
June offers little help as well: combining May and June, gold averaged just a 0.2% return and posted gains in only 13 of the past 25 years.
That said, the seasonal tide turns in summer. July sees an average gold return of 0.9%, while August delivers the real momentum, with a 1.9% average gain, its second-best month of the year after January.
S&P 500 Seasonality Remains Equally Uncertain
Stocks share a similarly choppy seasonal record in May. Over the past 25 years, the S&P 500 posted positive May returns 15 times, with an average monthly gain of 0.2%. But June tends to be a drag for equities, with an average loss of 0.6%.
July, however, could favor the bulls: the S&P 500 has historically rallied 1.6% on average in that month, making it the second-best performing month behind November.
Post-Election Years: Stocks Historically Had A Slight Edge
Post-election years tend to favor equities over gold.
Analyzing 97 years of data, the S&P 500 has posted an average gain of 4.8% in the year following a U.S. presidential election, with 14 up years and 10 down years.
In comparison, gold has shown more modest returns as the bullion advanced by an average of 2.8%, registering gains in just 8 instances versus 6 losses.
This suggests that, historically, stocks tend to perform better than gold in the early phase of a new presidential term – despite both assets show weaker-than-average annual returns.
Read now:
Photo: Shutterstock
