What Stock Markets Are Most Correlated To Gold?


Calculating the Correlation of Gold to Stocks

Gold has risen from the ashes this year to be one of the best performing assets in 2016. With yields heading into negative territory for many countries, and both stock and bond markets looking overvalued, gold has become the chosen one for many asset managers and is up almost 29% on the year.

This has been a remarkable reversal since gold had been on a downward trend since the second half of 2012. Despite the move this year, gold is also far from the highs reached in 2011:

GoldChartSo for investors who want to tilt a portfolio towards a bullish gold view, we wanted to look at what stock markets followed gold the most. So we calculated the correlations of major stock markets and the frontier stock markets we followed, to gold’s performance over the past 10 years.

We used monthly correlations and looked at them over 6 time periods: the past 6 months, 1 year, 2 years, 5 years, 8 years, and 10 years. It’s useful to look at the recent correlation (6 months) to see if there’s been a change in trend, but it’s more important to look at an established trend across multiple time frames. All data as of the end of June 2016.

Correlation of Gold to Developed Stock Markets

First we looked at the correlation of gold to major stock markets to establish a baseline:

GoldvDevelopedCorrelBrazil and Russia stand out as two markets that are very positively correlated to gold. Because of those two, the MSCI EM index has also performed relatively closely to gold, as has the MSCI FM index. Oddly, South Africa has not been very correlated to gold over the past 2 years despite being the biggest gold producing country. Out of developed countries, Canada has historically been the most correlated to gold, with the UK showing a slightly positive correlation as well.

Correlation of Gold to African Stock Markets

GoldvAfricaCorrelIt is interesting that Africa, despite its reputation as overly dependent on natural resources, is not very correlated to gold at all. Tanzania and Zambia aside, African stock markets have very little correlation to gold, positive or negative. Part of the appeal of Africa’s frontier stock markets has always been how uncorrelated it is to the rest of the world, and now we know that includes gold.

Correlation of Gold to Latin American Stock Markets

GoldvAmericasCorrelLatin America is the continent investors should focus on if they are looking for a portfolio positively correlated to gold. Argentina and Colombia although surprisingly, Peru has historically not been very correlated. Trinidad and Tobago has also been positively correlated to gold.

Correlation of Gold to Frontier European Stock Markets

GoldvEuropeCorrelFrontier Europe’s stock markets are also very uncorrelated to gold. Macedonia is the only country that is slightly (positively) correlated to gold and even then the correlation is weak. Given the dearth of gold producers in Europe, the results are not surprising.

Correlation of Gold to Middle Eastern Stock Markets

GoldvMiddleEastCorrelThe stock markets in the Middle East are a mixed bag. Oman and Egypt are the only two markets that show a strong correlation and both are positively correlated. What this implies is that oil and gold are not very correlated to each other despite them both being bundled under a commodities asset class.

Correlation of Gold to Frontier Asia Stock Markets

GoldvAsiaCorrelFinally, we get to Asia. Unfortunately, data is scarce for Cambodia and Laos since they have not been around long enough. The Philippines is the only market that has historically been correlated to gold


After calculating the correlations of gold to both major and frontier stock markets, only a few stand-out as materially, positively correlated to gold:

Developed Markets:

  • Canada

Emerging Markets:

  • Russia
  • Brazil

Frontier Markets:

  • Tanzania
  • Argentina
  • Chile
  • Colombia
  • Trinidad and Tobago
  • Macedonia
  • Egypt
  • Oman
  • Qatar
  • Philippines



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