S&P 500 Is Getting Crushed By Gold—The Last Time This Happened, It Didn't End Well

Gold’s relentless rally in 2025 has left the S&P 500 in the dust, raising uncomfortable parallels with 2008—when financial markets last witnessed such a dramatic divergence between the precious metal and equities, and what followed was far from pleasant.

Through Sept. 3, gold has skyrocketed 34% year-to-date, while the S&P 500 – as tracked by the Vanguard S&P 500 ETF VOO – managed a modest 9% gain.

This 25-percentage-point gap marks gold’s strongest outperformance over stocks since the 2008 financial crisis, when gold surged 5% and the S&P 500 collapsed by over 38%.

What’s Fueling The Gold Rush?

Several powerful forces have aligned to send gold soaring this year, propelling spot prices above $3,500 per ounce for the first time in history, with nearby futures even touching $3,600.

In a note Wednesday, Goldman Sachs strategist Lina Thomas said gold’s role as a hedge is once again front and center.

“Hedging portfolio risk with gold has come back into focus this year,” she said, citing the sharp post-April selloff in both bonds and stocks and “renewed questions about Fed independence.”

In a world where U.S. dollar assets are no longer guaranteed safe havens, gold is attracting both institutional and sovereign buyers.

“Central banks have also accelerated gold purchases,” Thomas said, noting that global central bank gold buying has increased more than fivefold since the U.S. and its allies froze $300 billion in Russian central bank reserves in 2022.

Those reserves can’t be frozen when held in physical gold, especially when stored domestically. This insulation trend, Thomas said, is lifting prices across the board as countries rush to hoard.

Central Banks Are All In — And That’s Bullish

According to the International Monetary Fund, gold now accounts for 15% of global central bank reserves, up from just 9% before Russia’s invasion of Ukraine in early 2022.

That jump reflects a structural shift among emerging market economies and autocratic regimes pivoting away from dollar-dependency.

Veteran strategist Ed Yardeni wrote on Tuesday that the trend is unlikely to reverse soon.

He highlighted that rising wealth in India and growing investor anxiety in China — particularly following the collapse of its housing sector — are fueling private sector demand for gold as well.

“President Donald Trump‘s attempts to reorder the world’s geopolitical order… might be unsettling and bullish for gold,” Yardeni said, adding that any threat to Federal Reserve independence from the Trump administration is also likely to support higher gold prices.

What The Gold Chart Is Saying

Technicians are also onboard with the bullish outlook.

Bank of America analyst Paul Ciana said gold’s breakout past $3,500 confirms a medium-term bullish triangle formation.

His next upside targets are $3,735 and potentially near $4,000 — a level some analysts believe could be hit before year-end.

Ciana described the breakout as “tactical,” suggesting that momentum could carry prices even higher.

He also flagged strength in other precious metals: Silver has surpassed $40, with resistance at $47.40 and a possible test of its 2011 highs near $50. Platinum is showing bullish signals above $1,260.

Is 2025 Another 2008?

Not quite — at least not yet.

In 2008, the S&P 500 was already down 14% through September, making the gold outperformance a result of collapsing equities. This time, stocks are still positive — albeit lagging.

The key difference is that in 2025, gold’s outperformance is not a reaction to a stock market crash but the result of proactive hedging amid geopolitical and monetary uncertainty. That doesn’t make it less dangerous — it just means investors may be facing a slow burn instead of a sudden fire.

If the divergence continues, investors should ask themselves: is gold flashing a warning sign, or is it simply adapting to a new global order?

Read Next:

Photo: Shutterstock