S&P 500, Gold At Risk Of Being In A Bubble After Flashing 'Explosive’ Price Patterns For First Time In Five Decades, Says BIS

• BIS noted that both the S&P 500 and gold prices have surged in “lockstep” throughout the recent market rally.
• Since dipping in April this year after President Donald Trump announced the “Liberation Day” tariffs, the S&P 500 has surged 38% so far, while gold prices have gained more than 41%.
• On Monday, Oppenheimer’s Chief Investment Strategist John Stoltzfus said he expects the S&P 500 to reach 8,100 by the end of 2026.

The S&P 500 index and gold are at risk of being in a bubble, according to the latest report by the Bank of International Settlements (BIS).

The BIS pointed out that the S&P 500 index and gold have exhibited “explosive behavior” jointly for the first time in the last 50 years.

“A widely used statistical test to detect the explosiveness of a price process suggests that both the S&P 500 and the price of gold have entered explosive territory in recent months,” BIS said.

It noted that explosive prices are associated with low future returns.

Surging In Lockstep

BIS noted that both the S&P 500 and gold prices have surged in “lockstep” throughout the recent market rally.

Since dipping in April this year after President Donald Trump announced the “Liberation Day” tariffs, the S&P 500 index has surged 38% so far. In the same period, spot gold prices have gained more than 41%.

Earlier on Monday, Oppenheimer’s Chief Investment Strategist John Stoltzfus said he expects the S&P 500 to reach 8,100 by the end of 2026, up 18% from current levels.

BIS’ Warning

The central bank body warned that a sharp, swift correction typically follows a bubble burst, adding that the growing influence of retail investors is a sign of a developing bubble.

“Historically, the prices of U.S. equities and gold have breached the explosive behaviour threshold at different times. This was often followed by a significant correction, such as in 1980 for gold (after having surged during the Great Inflation) and the burst of the dotcom bubble for US equities,” it stated in a report.

Analysts at ING Think stated in a note on Monday that they expect the yellow metal to continue to shine in 2026. They expect gold prices to average $4,325 per troy ounce in 2026, implying an upside of more than 3% from current levels.

Meanwhile, U.S. equities edged lower in Monday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down by 0.17%. Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the ‘bearish’ territory.

The SPDR Gold Shares ETF (GLD) and iShares Gold Trust ETF (IAU) were down by 0.02% at the time of writing.

Also See: With Fed Rate Announcement Scheduled For Wednesday, Here’s How US Treasury Yields Are Behaving

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