Gold has gained 37% year-to-date, nearly four times the S&P 500’s return despite a strong rally

Gold is running laps around Wall Street’s finest. The S&P 500 has surged 1,650 points in under five months, one of the strongest runs in decades.

But according to fresh numbers from Apollo, gold is up +37% year-to-date, nearly four times the return of the stock market. And this isn’t some weird outlier. Since the start of 2023, gold has climbed almost 100%, while the S&P 500 gained about 67% in the same window.

That’s happening while the world screams about AI and calls it the biggest tech leap since the internet. But even that hype hasn’t lifted stocks beyond gold. The question isn’t why the metal’s up, it’s why everything else is still trailing it.

Historically, gold only pops when things go south. It’s the panic button. When investors get scared, they leave stocks and grab gold, just like they used to do with bonds. But something broke that relationship.

Gold moves with stocks as inflation and debt climb together

Since 2020, the old patterns have flipped. Gold and the S&P 500 are now moving together. In 2024, the correlation between the two hit 0.91, an all-time high. That means both are climbing at the same time. Normally, that doesn’t happen.

The change is tied to how markets are reading inflation and debt. Long-term inflation is being baked into asset prices, and the government’s spending binge is pumping the Treasury market full of new debt.

As the U.S. deficit approaches $2 trillion, Washington is issuing more bonds to keep the lights on. That bond flood is dragging prices down. Bonds, once a trusted safe zone, are now shaky. So investors are ditching them and choosing gold instead.

The demand has pushed central banks into overdrive. They now hold more gold than U.S. Treasuries for the first time since 1996. That shift isn’t random. It’s a signal that even the most conservative institutions are moving out of debt and into metals.

That debt overhang also explains why term premiums are climbing. The term premium, the extra payment investors want for holding long-term debt, has jumped to 0.75%, the highest level since 2013.

And as those risks climb, the demand for gold keeps growing. The metal saw a buying surge in late April and early May, right as the term premium began spiking.

Central banks pile into gold as inflation breaks Fed targets

Meanwhile, inflation expectations for the next 5 to 10 years are climbing. Markets no longer believe the Fed can deliver its 2% inflation target. That has turned gold from a hedge into a core position.

And as interest rates get cut around the world to fight job losses and weak economies, inflation keeps rising. Central banks are trying to spend their way out of the hole. The result? More deficit, more bonds, and more demand for gold.

On the tech front, equities did get a small lift. On Wednesday, the Nasdaq Composite rose 0.6% after a U.S. court handed Alphabet a mixed decision in its antitrust fight.

Judge Amit Mehta ruled that while Google can keep running its Chrome browser, it must stop making exclusive search deals and has to open up access to its search data. That helped Alphabet dodge a full-blown crackdown.

Shares of Google’s parent company jumped 8% after the ruling. The decision was seen as a win for the company, mostly because it avoided being forced to split up or shut down parts of its business.

Mehta leaned on the argument that AI has created more options for users, making Google’s dominance less clear-cut. But even with that legal break, and even with AI headlines on full blast, stocks can’t keep up with gold.

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