Cite This Comparison
"Gold vs S&P 500 (XAU vs SPY): Returns, Risk & Volatility (2025)." Gale Finance, December 31, 2025. https://www.gale.finance/compare/xau-vs-spy-2025 Free to use with attribution. Please link back to this page or gale.finance.
Analysis period: 2025-01-01 to 2025-12-31
Relative Performance of XAU vs SPY (Normalized to 100)
Normalized to 100 at start date for comparison
Key Takeaways
- Total Return: XAU delivered a +62.5% total return, while SPY returned +18.0% over the same period. XAU outperformed on total returns.
- Risk-Adjusted Return (Sharpe Ratio): XAU had a higher Sharpe (2.34 vs 0.74), indicating better risk-adjusted performance.
- Volatility (Annualized): SPY was more volatile, with 19.5% annualized volatility, versus 19.3% for XAU.
- Maximum Drawdown: XAU's maximum drawdown was -9.7%, while SPY experienced a deeper drawdown of -18.8%.
Gold vs S&P 500 Correlation
Gold and S&P 500 were negatively correlated in 2025. With a negative correlation of -0.04, these assets tended to move in opposite directions, potentially offering strong diversification benefits.
For portfolio construction, this negative correlation suggests that combining XAU and SPY could significantly reduce portfolio variance through offsetting movements.
| Metric | Metric | Value |
|---|---|---|
| Current (30-day) | 0.26 | |
| Average (full period) | -0.04 | |
| Minimum | -0.67 | |
| Maximum | 0.57 |
Correlation measures how closely two assets move together. Values near +1 indicate strong co-movement, near 0 indicates independence, and negative values indicate inverse movement.
Investment Comparison
If you invested $10,000 in each asset on January 1, 2025:
Difference: $4,446.957 (XAU ahead)
Gold and S&P 500: Risk Analysis
Gold experienced its maximum drawdown of -9.7% from 2025-10-20 to 2025-11-04. It has not yet recovered to its previous peak.
S&P 500 experienced its maximum drawdown of -18.8% from 2025-02-19 to 2025-04-08. It has not yet recovered to its previous peak.
Smaller drawdowns and faster recoveries indicate lower downside risk and greater resilience during market stress.
Sharpe Ratio of XAU and SPY
Sharpe ratio measures return per unit of risk (volatility). A higher Sharpe indicates better risk-adjusted performance. XAU had a higher Sharpe (2.34 vs 0.74), indicating better risk-adjusted performance.
A Sharpe above 1.0 is generally considered good, above 2.0 is excellent. Negative Sharpe means the asset underperformed the risk-free rate. Calculated on each asset's full 365-day lookback of available prices and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).
Sortino Ratio of XAU and SPY
Sortino ratio measures return per unit of downside risk. Unlike Sharpe, it only penalizes negative volatility. XAU had better downside-adjusted returns.
A higher Sortino is better. It's particularly useful for assets with asymmetric volatility (big gains, smaller losses). Downside volatility: XAU 13.9% vs SPY 15.3%. Calculated on each asset's full 365-day lookback of available prices and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).
Full Comparison of Gold vs. S&P 500 (2025)
| Metric | XAU | SPY |
|---|---|---|
| Total Return | +62.5% | +18.0% |
| Annualized Volatility | 19.3% | 19.5% |
| Sharpe Ratio | 2.34 | 0.74 |
| Sortino Ratio | 3.26 | 0.94 |
| Max Drawdown | -9.7% | -18.8% |
| Avg Correlation to S&P 500 | N/A | N/A |
Gold vs S&P 500: Frequently Asked Questions
Which had higher volatility: XAU or SPY?
SPY showed higher volatility at 19.5% annualized, compared to 19.3% for XAU During 2025. Higher volatility meant larger price swings in both directions.
Did XAU provide diversification when held with SPY?
XAU and SPY were negatively correlated in 2025, with an average correlation of -0.04. This negative correlation suggested strong diversification benefits through offsetting movements.
Which had better risk-adjusted returns: XAU or SPY?
XAU showed better risk-adjusted performance with a Sharpe ratio of 2.34 versus SPY's 0.74 During 2025.
Could XAU and SPY have been combined in a portfolio?
Yes, though allocation sizing mattered. Their negative correlation could have significantly reduced portfolio variance through offsetting movements. SPY's higher volatility (19.5%) meant even small allocations can materially impact overall portfolio risk.