S&P 500-to-gold ratio: what it means and where it might go
The S&P 500-to-gold ratio provides a clear way to compare the performance of US equities with gold. By tracking how many ounces of gold are required to equal the value of the S&P 500 index, the ratio helps illustrate shifts in investor sentiment and the balance between risk and caution.
The S&P 500-to-gold ratio is a long-used gauge of market sentiment – a snapshot of investors’ collective confidence in equities relative to gold. As of mid-November 2025, the ratio has declined to about 1.66 – its lowest level since March 2020 – reflecting gold’s stronger performance relative to US equities (Discovery Alert, 14 November 2025).
What is the S&P 500 to gold ratio?
The S&P 500 to gold ratio shows how many ounces of gold it takes to buy the S&P 500 index (also known as the ‘US 500’) at a given time. It measures the relative performance of US equities and gold, with gold often viewed as a traditional store of value during periods of uncertainty.
For instance, a ratio of 2.0 means the S&P 500 trades at twice the price of an ounce of gold, while a ratio below 1.0 suggests the index’s value is lower than the gold price.
In practical terms, the ratio acts as a barometer of risk appetite. A rising ratio often indicates greater confidence in equities, while a falling ratio may suggest increased demand for defensive assets such as gold.
At its simplest, the ratio represents a ‘long S&P 500/short gold’ relationship – favouring equities over gold.
US 500 price chart
Past performance is not a reliable indicator of future results.
Current levels: ratio, S&P 500 and gold
As of 18 November 2025, the S&P 500 stands near 6,734.11, while gold trades around $4,087.60 per ounce. This places the S&P 500/gold ratio at roughly 1.66, its lowest since the early pandemic period (DWS Asset Management, 10 November 2025).
This narrowing reflects an uncommon market dynamic – gold has gained about 60% in 2025, compared with the S&P 500’s 16% rise. The contrast suggests a degree of economic caution not yet mirrored in equity volatility, signalling that investors may be positioning defensively despite resilient stock prices.
Past performance is not a reliable indicator of future results.
Historical perspective: what past cycles reveal
The S&P 500/gold ratio has shifted markedly over the past five decades, reflecting changes in the global economy and investor sentiment.
| Period | Approx. ratio low | Macro context | Outcome |
|---|---|---|---|
| Late 1970s | ~0.17 | Stagflation, oil crisis | Gold outperformed as inflation rose |
| 2000 (dot-com peak) | ~5.5 | Tech bubble, peak risk appetite | Equities fell, gold bottomed |
| 2007–09 financial crisis | ~0.66 | Credit crisis, global recession | Gold outperformed as equities dropped |
| March 2020 | ~1.5 | Pandemic and policy response | Gold rallied, equities rebounded |
| 2025 (current) | ~1.66 | Strong S&P 500, record gold prices | Ratio compressed near pandemic levels |
Historically, ratios below 1.7 have often coincided with economic stress, including the stagflation of the 1970s, the 2008 crisis and the 2020 pandemic shock. While today’s conditions differ, the combination of AI-driven equity optimism and record gold prices highlights a cautious undercurrent.
Macro backdrop: gold’s 2025 performance
Gold price movements in 2025 have been supported by persistent inflation expectations, geopolitical uncertainty and steady central bank buying (World Gold Council).
US equities have held up, driven by AI-related growth and stable earnings. However, gold’s strong performance alongside rising equities is rare, and can indicate tight liquidity or concern over slower economic growth – factors not yet fully reflected in broader indices.
The S&P 500’s Shiller price-to-earnings ratio near 40 (Robert Shiller, Yale University) also points to valuations that appear elevated relative to long-term averages.
Gold price chart
Past performance is not a reliable indicator of future results.
Federal Reserve projections: slower but steady growth
The Federal Reserve’s November 2025 projections point to moderate growth and a gradual easing in policy rates:
| Variable | 2025 | 2026 | Longer run |
|---|---|---|---|
| Change in real GDP | 1.7% | 1.9% | 1.8% |
| Unemployment rate | 4.2% | 4.1% | 4.0% |
| PCE inflation | 2.4% | 2.2% | 2.0% |
| Core PCE inflation | 2.3% | 2.1% | 2.0% |
| Federal funds rate | 3.9% | 3.1% | 2.5% |
Source: Discovery Alert, 14 November 2025.
These figures suggest the Fed is approaching the end of its tightening cycle, yet relatively high real rates continue to weigh on risk assets and support gold’s appeal as a diversifier amid slower growth and ongoing uncertainty.
Portfolio implications and market sentiment
The falling ratio has prompted investors to review portfolio balance, with some institutions reportedly increasing gold exposure as a hedge against potential equity overvaluation (Reuters).
However, a low ratio does not necessarily mean gold is undervalued. It can also reflect latent risk in equities that markets have not yet priced in. This divergence – strong equities alongside rising gold – may indicate a temporary phase of optimism before potential repricing.
Past cycles show that such periods have often led to either equity corrections or gradual gold pullbacks as market sentiment adjusts.
The Dow/gold ratio: similar signals
The Dow Jones Industrial Average – or ‘US Wall Street 30’ – to gold ratio, currently near 11.5, is well below its long-term average. This reinforces the message from the S&P 500-to-gold ratio – that gold’s relative strength may be capturing broader structural uncertainty.
Key takeaways
The S&P 500-to-gold ratio’s drop to 1.66 marks a notable shift in investor positioning. Equities remain firm, but gold’s momentum and historical parallels suggest investors are preparing for a more uncertain environment.
The ratio continues to serve as a valuable cross-asset indicator, reflecting the balance between confidence and caution. Whether this phase leads to another long-term realignment, as seen in 1980, 2008 or 2020, may depend on policy direction, economic resilience and investor risk perception.
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FAQ
What does the S&P 500-to-gold ratio show?
The S&P 500-to-gold ratio measures how many ounces of gold are needed to purchase the S&P 500 index at a given point in time. It reflects the relative performance of equities and gold, serving as an indicator of overall market sentiment and investor risk appetite. A rising ratio generally points to greater confidence in equities, while a falling ratio indicates a shift towards perceived safe-haven assets such as gold.
Why is the S&P 500-to-gold ratio important for traders and investors?
The ratio helps traders and analysts gauge broader market sentiment and identify changes in the balance between risk and caution. Historically, sharp declines in the ratio have tended to coincide with economic slowdowns, including the 1970s stagflation, the 2008 financial crisis, and the 2020 pandemic shock. While not a predictive measure, it provides useful context for understanding how equity and gold markets behave under different macroeconomic conditions.
What is the current S&P 500-to-gold ratio and what does it imply?
As of mid-November 2025, the ratio stands at around 1.66, its lowest level since March 2020. This reading reflects gold’s strong performance alongside moderate equity gains, suggesting that market sentiment remains cautious amid factors such as slowing global growth and ongoing monetary policy uncertainty.
Can I trade the S&P 500 and gold as CFDs?
Yes. On Capital.com, you can trade CFDs on both the US 500 index (S&P 500) and gold, allowing you to speculate on price movements in either direction – whether prices rise or fall – without owning the underlying assets. However, CFDs are traded on margin, and leverage amplifies both profits and losses.