Gold stellar performance – not first time at this stage of the cycle

Since the last rate hike by the FOMC in July 2023, gold has already increased by 17.0%, and the S&P500 only 14.1%. Figure 1.

If we look at the performance of gold after the last rate hike by the Fed, the current behavior of gold is similar to the cycles of 2018-2020 and 2006-2008 - see Figure 2.

And what is the Gold 3-year rate of return, counting from the last hike ? – see Figure 3:

+27.8% (2000-2003),

+62.0% (2006-2009),

+43.8% (2018-2021).

Figure 4 shows the 3-year rate of return for gold and the S&P500 (counting from the last FOMC rate hike).

Based on the last 3 cycles, whether gold outperforms the S&P500 depends mainly on the soft/hard-landing scenario (i.e. what will really happen after the FED starts the rate cut cycle).