Gold Shines Bright in 2023: The Precious Metal Surpasses S&P 500 Amid Global Tensions

In 2023, gold has been a standout, surpassing the S&P 500, particularly during an October surge that pushed the price of the precious metal close to the $2,000 per ounce mark – a level unseen since May.

This rally in gold is largely attributed to increased demand for safety hedges after the Oct. 7 assault by Hamas on Israel, which ignited tensions and military engagements. The repercussions of this attack increased the appeal of gold as a safe haven. By the close of Thursday, the S&P 500 SPX had increased by 7.8% from the beginning of the year, while gold futures for the same duration recorded a 9.2% rise, as per Dow Jones Market Data.

Specifically, gold futures for October delivery closed at $1987.20 per ounce on Thursday, a peak since May 16, as shown by FactSet data. Since October’s commencement, gold has surged over 7.5%, whereas the S&P 500 has diminished 3.5% and is on track for its third successive monthly decline. If this trend persists, it will be the first three-month downturn for the index since March 2020.

Historically, gold also took the lead in 2022. Although gold futures slightly dipped by the end of the year, the decline was not as steep as the S&P 500’s 19.4% tumble. Furthermore, in 2020, gold futures saw a 24.4% uptick, in contrast to the S&P 500’s 16.3% increase.

As of the recent Thursday closing, the S&P 500 has retracted 9.8% from its peak in 2023, recorded at 4588.96 on July 31. This puts the index nearing the correction threshold, marked by a 10% or more decrease from a recent apex.

Adding to the market fluctuations, over the past two trading sessions, the index has decreased 2.6% – the most significant two-day slump since the Silicon Valley Bank debacle on March 10, which jolted markets. When contrasting gold’s performance with an equal-weighted S&P 500, gold’s dominance becomes even more evident, given the latter has receded 4.3% year-to-date, as per FactSet data.