Key Points
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Goldman Sachs expect gold prices to jump 13% during the next year; UBS and JPMorgan Chase anticiapte upside of 28% and 30%, respecitively, this year.
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Gold tends to outperform the S&P 500 during periods of economic distress, and the SPDR Gold Shares ETF provides direct exposure to the precious metal.
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The S&P 500 tends to outperform gold during periods of economic strength, and AI should drive economic growth by increasing productivity and efficiency.
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Earlier this month, Goldman Sachs strategists updated their forward estimates for different asset classes. The S&P 500 (SNPINDEX: ^GSPC) is forecast to reach 7,600 by April 2027, implying 7% upside from its current level of 7,126. But gold is forecast to hit $5,445 per ounce, implying 13% upside from its current price of $4,830.
Investors can get exposure to the S&P 500 by purchasing shares of the Vanguard S&P 500 ETF (NYSEMKT: VOO), and they can get exposure to gold by owning the SPDR Gold Shares ETF (NYSEMKT: GLD). Here are the details.
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The SPDR Gold Shares ETF provides convenient exposure to a safe-haven asset
The SPDR Gold Shares ETF is an exchange-traded fund run by State Street. It tracks the price of gold by dividing physical bullion held in vaults into shares. For investors, the benefit is twofold: (1) The fund is more liquid than gold bars because it can be bought and sold in seconds, and (2) the fund is more convenient because it does require physical storage space.
Gold is an attractive way to diversify a portfolio because its price has historically shown little correlation with stocks and bonds. In particular, gold is attractive during periods of geopolitical tension and macroeconomic distress (or other situations that could cause stocks and bonds to drop) because its value is not based on financial results or the promise of future interest payments.
According to State Street, “Gold has demonstrated a low and negative correlation to many financial asset indexes over time and has a track record of providing a hedge during periods of large market drawdowns, systemic risk, and geopolitical volatility.”
Gold prices have dropped more sharply than the S&P 500 in 2026
Interestingly, gold has not behaved like a safe-haven asset this year. While the S&P 500 dropped 9% from its high amid tensions created by the Iran conflict and rising oil prices, gold prices plummeted 19% as investors took profits after its historic run in previous months. That is abnormal because gold typically serves as a hedge against geopolitical instability.
Why did that happen? Gold was vulnerable to a drawdown because its price had doubled between January 2025 and March 2026 because of economic uncertainty created by President Trump’s tariffs and his attacks on the Federal Reserve. So while geopolitical instability has historically been a catalyst for price appreciation, gold actually fell more sharply than stocks this time.
Nevertheless, Goldman Sachs strategists are not alone in thinking gold prices will increase substantially in the coming months. UBS recently raised its 2026 target to $6,200 per ounce and J.P. Morgan raised its 2026 target to $6,300 per ounce, implying upside of 28% and 30%, respectively, from the current price of $4,830.
The S&P 500 is still an attractive investment option as the AI boom unfolds
The Vanguard S&P 500 ETF measures the performance of the S&P 500, an index comprising 500 large U.S. companies that form the core of the American economy, which is objectively the largest and subjectively the most innovative economy in the world.
I say that because 15 of the 20 most valuable technology stocks in the world are U.S.-based companies, which means the American economy is especially well positioned to benefit from the artificial intelligence revolution. The Vanguard S&P 500 ETF offers heavy exposure to those technology stocks, while still providing diversity across other market sectors.
Interestingly, gold often underperforms the domestic stock market during periods of strong economic growth. The U.S. economy expanded at 2.4% annually between 2010 and 2020, driven by the rapid adoption of cloud and mobile technologies. During that time, the S&P 500 posted a total return of 257% (13.5% annually), while gold returned 38% (3% annually).
Similar outperformance is possible over the next decade as AI adoption drives the U.S. economy to new heights. So I would keep a much larger percentage of my portfolio in an S&P 500 index fund as opposed to gold, especially when gold’s price has increased at an unprecedented pace in the past two years.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Goldman Sachs Group, JPMorgan Chase, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
