Image Source: Pixabay

It’s been a volatile year for stocks so far, but more surprising is that gold prices, which have rallied more than 25% YTD, have been even more volatile. Year to date, the SPDR Gold Trust (GLD) has experienced a daily move of at least 1% on 40% of all trading days compared to 37% for the S&P 500, as measured by the SPDR S&P 500 ETF (SPY).

The chart below shows the rolling 50-day average number of daily 1% moves in GLD over the last 20 years. The current level of 54% is modestly below the recent high of 56%, and that was the highest frequency of daily 1% moves since late 2011!  The second chart shows the same calculation for SPY over the last 20 years. While the current level of 42% is hardly extreme relative to history, earlier this month it was at 52%.

In both charts, areas where the line shifts from blue to red indicate periods when both GLD and SPY had 1%+ daily moves on more than 40% of trading days in a rolling 50-day period. The only periods in the last 20 years when both ETFs simultaneously had 1%+ daily moves over 50 days were during the Financial Crisis, late 2011 after S&P downgraded the US AAA credit rating, early 2016, Covid, and now.

The chart below shows the performance of GLD over the last 20 years, and here again, the red line indicates the periods when both GLD and SPY had 1%+ daily moves at least 40% of the time over a 50-day span. For GLD, there was no consistent pattern of performance leading up to or after these periods.

For the S&P 500, however, the pattern surrounding these occurrences was more consistent. Except the Financial crisis when elevated levels of volatility in both ETFs started just after the S&P 500’s peak and continued for most of the bear market, in the three other periods (and the current period), it wasn’t until late in the decline or after the market made its low that the average number of 1% daily moves in each ETF exceeded 40%.

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