【MACRO Alert】Stock market weakness and gold soaring - a complete analysis of the rare divergence phe

Recently, the performance of the US stock market and the gold market has shown a clear divergence. The S&P 500 index performed poorly in 2025, while the price of gold climbed to a record high of more than $3,000 per ounce. This divergence not only reflects the change in market sentiment, but may also indicate the direction of the market in the coming months.

Dean Christians, senior research analyst at SentimenTrader, noted that the S&P 500 has underperformed gold futures by 24% over the past three months, the largest gap since March 2022. This return gap has been below negative 24% only 5% of the time since 1970. This divergence typically reflects increased pessimism among traders and often signals a bottom in the stock market in the coming months, followed by a potential rebound.

Christians believes that this divergence helps determine whether the current stock market correction is a routine adjustment in the bull market or the beginning of a shift to a bear market. From historical experience, when the three-month return gap between the S&P 500 and gold futures falls below negative 24%, the outlook for the stock market in the following weeks is slightly unfavorable, and it may experience a bottoming process of repeated shocks. However, once the dust settles, the large-cap index has a 65% probability of rising in the next two months.

Although gold prices have hit record highs recently, there have been some fluctuations in the market. According to foreign media reports, gold prices fell on Monday, with spot gold falling 0.4% to $3,010.33 per ounce and U.S. gold futures falling slightly by 0.2% to $3,015.50 per ounce. The U.S. dollar index rose 0.2% to a more than two-week high, making gold denominated in foreign currencies more expensive for overseas buyers. Bart Melek, head of commodity strategy at TD Securities, said the market was affected to some extent by the strength of the U.S. dollar and was currently in a consolidation phase.

In addition, investors are also evaluating US President Trump's cautious stance on tariffs. Last week, Trump hinted at some flexibility on the reciprocal tariffs that are about to take effect, which may have further impact on the market. Although gold prices have recently hit a new high, the market is still divided on its future trend. Haworth, senior strategist at Bank of America Wealth Management, believes that investors should remain cautious at current levels. For gold prices to remain above $3,000 per ounce, market uncertainty needs to increase further.

However, the market may have digested a lot of negative news about the global economy and the US dollar, and gold prices may face pressure once uncertainty peaks and stabilizes. Haworth also mentioned that although the European Central Bank and the Bank of Canada continue to cut interest rates, the stance of other major central banks is more neutral. Last week, the Federal Reserve announced that it would maintain interest rates at 4.25%-4.50% and said it was still concerned about inflation. The Bank of England, the Swiss National Bank and the Swedish Central Bank also maintained their respective interest rates unchanged. The impact of this interest rate environment on gold prices cannot be ignored.

Despite the increased attention paid to gold, USBWM management is not ready to invest in the precious metal at this time. It will only consider investing in gold if it sees a continued threat of stagflation. However, high prices will not be an obstacle, and the key lies in the fundamental issue of gold, that is, whether more people are willing to buy gold. Demand for gold in Asia is expected to remain strong, which may provide support for gold prices.

In summary, the divergence between the US stock market and the gold market reflects the complex changes in market sentiment. The divergence between the S&P 500 index and gold futures may indicate a short-term adjustment in the stock market, but in the long run, the market still has certain rebound potential. Although the gold price has hit a new high, its future trend still needs to pay attention to the development of the global economic environment and market uncertainty. Investors should remain cautious in the current market environment and pay attention to changes in fundamental factors to make more informed investment decisions.