Core Insights - Gold prices have recently surged due to a combination of government shutdown concerns, expectations of interest rate cuts, and escalating tariff tensions with China [1][8] - Gold futures have surpassed $4,000 per ounce, while the S&P 500 Index reached a record high of $6,774.58 [2] - Over the past two months, gold has increased by more than 18%, while the S&P 500 has risen approximately 5% [4] Performance Analysis - Historical data indicates that after periods where gold rose at least 18% and the S&P 500 increased by 5%, the S&P 500 typically experienced an average six-month return of -0.1%, with less than half of the returns being positive [4] - The S&P 500's performance following similar signals since 1980 shows an average return of -1.11% over one week and -0.13% over two weeks, with a median return of -1.51% and -0.08% respectively [5] - The last signal in May 2020 demonstrated outperformance from stocks across all timeframes, although both the S&P 500 and gold underperformed in the short term [6][7] Market Dynamics - The SPX/GLD ratio reached 0.54 by the end of the week, with significant support at the 200-day trendline [2] - Gold's 14-day Relative Strength Index (RSI) peaked at 82.50, indicating it was overbought, which historically has led to subsequent drawdowns [6] - The recent spike in gold and stock prices has created a volatile environment, with the SPX experiencing its worst single session since early April due to heightened tariff rhetoric from President Trump [8]
Gold Gains Could Be Paused for Short-Term Traders
Schaeffers Investment Researchยท2025-10-14 16:34