What Assets Are Correlated With Gold?

It’s commonly said that gold is a safe-haven investment that can protect your portfolio from financial uncertainty. I have often heard that when the stock market falls, people turn to gold as a safer choice for their money. But is that really true? How is gold correlated with other assets, including stocks, bonds, and real estate? And what is its relationship with the value of the U.S. dollar?

What is a correlation?

To answer the questions above, we first have to understand what correlation means. In simple terms, a correlation is a relationship between two things. A positive correlation means that two things both go in the same direction, and a negative correlation (or inverse correlation) means that they go in opposite directions. An example of a positive correlation is age and net worth. Generally, the older people are, the higher their net worth. On the other hand, an example of a negative correlation is spending and saving. The more money you spend, the less you have to save.

How can we measure a correlation?

A correlation is generally calculated as a value, r, between -1 and 1, where -1 represents a perfect negative correlation and 1 represents a perfect positive correlation. An value of r near 0 indicates that the two variables are not correlated. Calculating r takes into account means and standard deviations. You can read about the specifics here. The easy way to do it is with the ‘=CORREL()’ function in Excel, which you can use to compare two sets of data.

How is gold correlated with the stock market?

Using gold futures to represent gold prices and the Schwab S&P 500 Index Fund (SWPPX) to represent the stock market (including dividend reinvestment), I calculated the correlation over the past 20 years from historical monthly data I downloaded from Yahoo Finance. I decided to use monthly data rather than daily data for two reasons. First, it simplified the task, since there’s significantly fewer data points, and second, I’m more interested in long-term investing rather than short-term investing. If gold only acts as a safe haven from the stock market for a few days, then it’s not really useful to me because it would be hard to time properly. You can see the results of my analysis here:

Graphs of the correlation between gold and stock prices from 2001 to 2021

As you can see, gold has had a drastically higher overall yield over the past 20 years compared to the S&P 500, increasing in value by about 600% compared to about 300%. Despite both assets increasing significantly in value over time, there is no apparent correlation between them. As shown in the scatterplot, the trendline between monthly yields is almost completely flat. The calculated value for r was +0.06, near zero. When you look at the correlation year-by-year, there is no consistency and the calculated correlation varies anywhere between -0.5 to +0.7. If gold truly acts as a safe haven when stocks decline, you would anticipate the two assets to have a negative correlation. Instead, at least over this time period, there was no correlation. This suggests that gold prices are independent of the overall stock market and are not a good investment to profit off of during a stock market downturn. However, since they are not correlated, gold can add diversity to your portfolio and can perform quite well over the long term.

How is gold correlated with bonds?

Next, I calculated the correlation between gold and bond prices, using the Vanguard Total Bond Market ETF (BND), including dividend reinvestment, to represent bonds. There was only data on BND historical prices back to 2008, so I only looked at 13 years this time.

Graphs of the correlation between gold and bond prices from 2008 to 2021

As you can see above, BND prices increased at a fairly stable rate from 2008 to 2021. In contrast, gold prices fluctuated quite a bit. However, they both ended up performing rather similarly. When you look at the prices side-by-side, you can see that there is quite a bit of similarity between periods of growth and decline. This is made more obvious by the positive trend line when comparing monthly returns. The calculated value for r was +0.47. While not a very strong correlation, this is still a moderately positive correlation. This correlation did not change much over time, nearly always remaining positive and around 0.4. This finding matches with what others have reported. In fact, it has been suggested that real interest rates (which take inflation into account) have one of the biggest impacts on gold prices.

How is gold correlated with real estate?

Another asset I was interested in taking a look at was real estate. To compare the real estate market with gold prices, I used the prices of Vanguard Real Estate Index Fund ETF Shares (VNQ), including dividend reinvestment. The data for VNQ went back to about 2005, so I compared prices over 16 years.

Graphs of the correlation between gold and real estate prices from 2005 to 2021

VNQ performed similarly to gold overall from 2005 to 2021, although gold had peaks around 2012 and 2020. It is pretty obvious from the graphs that there is little correlation between the two. There are long stretches of time when they increase in unison, and then at other times one goes up while the other goes down. When you look at the scatterplot, you can see that the trendline is almost flat. The calculated r value was +0.13, and this correlation varied significantly from year to year, anywhere from -0.5 to +0.5. Together, this suggests that there is no reliable correlation between gold and real estate.

How is gold correlated with the U.S. dollar?

In addition to investigating the correlation with asset types, I also wanted to check the correlation between gold and the U.S. dollar. Since gold is traded in U.S. dollars, a weaker U.S. dollar generally makes gold prices rise as it becomes more affordable in other currencies. To look at this relationship in more detail, I used prices of the U.S. Dollar Index (DXY), which compares the value of the U.S. dollar to foreign currencies, over the past 20 years.

Graphs of the correlation between gold and the U.S. dollar from 2001 to 2021

As you can see, in terms of overall yield, the value of the U.S. dollar has been pretty much unchanged since 2001. If you look at the price of DXY, you’ll see that it has actually decreased slightly. Based on the scatterplot, the correlation between gold and the dollar is about as expected, the trendline showing a moderately negative trend. The calculated value for r was -0.43. The correlation was negative most years between 2001 and 2021, although there was some variation (and even one year of positive correlation: 2010). Overall, the calculations match our expectation that a weaker dollar is correlated with higher gold prices.


Gold is generally considered a safe haven asset and a good way to diversify your portfolio. Of course, this depends on what other investments you already have. I found that gold prices are positively correlated with bond prices, negatively correlated with the value of the U.S. dollar, and not correlated with the stock market or real estate market. This means that gold can act as a safe haven against the U.S. dollar devaluating (as it’s often used to hedge against the effects of inflation). On the other hand, gold is not a safe haven for bond prices since their values are correlated, though this means it is a safe haven for bond yield since bond yields are inversely correlated with bond prices. Gold is also not a true safe haven for stocks or real estate since there is no correlation between them. That means that just because the stock or real estate markets dip, gold prices will not necessarily rise. However, since they are not correlated, gold can be a good way to diversify a stock and/or real estate-heavy portfolio.


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