S&P 500 smashes 7,000 for the first time ever as gold makes a new all-time high of $5,350

There’s now a major disconnect between gold and the S&P 500, and Barry Bannister says that’s a red flag for equities.

The Stifel strategist pointed out that the S&P 500’s performance relative to gold has broken down in a way that’s only happened four times in the past 100 years, and none of those ended well for stock market bulls.

Gold just hit $5,300, and it’s now up 90% over the past year, while the S&P 500’s only gained 15% in that stretch. Even after climbing to 7,000, the index is now stalling out while gold keeps pushing to new highs.

That kind of divergence, Bannister says, usually means trouble ahead. In past cycles, this kind of gap led to stocks staying range-bound for years.

Bannister added that even if this turns into a scenario where both gold and stocks keep going up, it would likely signal a full-scale flight from fiat currencies, which, in his words, has “never ended well in history.”

Gold’s rally is being fueled by investors walking away from the U.S. dollar. Rate cut expectations from the Federal Reserve, along with rising policy uncertainty under the Trump administration, have triggered hedging flows. There’s also growing unease over recent shifts in the U.S. National Security Strategy.

The dollar index (which doesn’t include the yuan) is down more than 10% over the past year, and just suffered its worst one-day drop since April 2025 after Trump said he wasn’t concerned about the currency’s decline.

Bannister closed by saying that after three straight years of double-digit S&P 500 gains, the market “may just consolidate.”

The euro just surged past $1.20 for the first time since June 2021, jumping as much as 1.7% to $1.2081, after President Donald Trump said he wasn’t worried about the dollar losing ground.

Trump told reporters Tuesday he thought the dollar was “doing great” and didn’t see a problem with the currency’s slide. That opened the door wider for more bullish euro bets.

The options market is now flashing the highest premium for upside euro hedges since March 2020, showing just how one-sided sentiment has gotten.

The dollar’s weakness isn’t just boosting Europe’s currency.

China’s yuan hit a 32-month high, touching 6.9449 against the dollar before settling at 6.9457. Beijing had already pushed the yuan higher with a stronger midpoint fix of 6.9755, the most aggressive daily adjustment since August.

While that fix was still 524 pips softer than Reuters’ estimate, it marked a clear signal from the People’s Bank of China.

Exporters are also piling in, with seasonal dollar conversions adding more pressure. The offshore yuan traded just below 6.939, holding steady.

Onshore vs offshore dollar/yuan swaps both showed a -4.65 pip move overnight. Three-month SHIBOR came in at 1.6%, slightly under the 1.8% CNH HIBOR offshore.

The yuan’s up 0.7% this month, after gaining 4.5% in 2025, driven by relentless greenback selling and solid end-of-year demand from China’s exporters.

Gold just hit a record high of $5,450 before pulling back to $5,338, lifting its total market cap past $35 trillion. The metal has now surged over 22% this year, as investors continue bailing out of the US dollar and sidestepping government bonds in developed markets.

There’s growing unease around Washington’s policy direction, and it’s pushing people out of the usual safe-haven options. Bonds are falling out of favor. That vacuum is driving demand straight into gold.

Silver’s no slouch either. In Shanghai, it’s trading at $140, fueled by strong industrial demand and Yuan volatility. That premium over global prices points to tight supply or a stampede of local buyers. Silver’s been ripping higher for months and just clocked its biggest monthly gain since 1979, now up nearly 60% in January alone. It more than doubled in 2025.

This spike is triggering massive action in the iShares Silver Trust ETF, which saw $40 billion in turnover on Monday. That’s neck and neck with State Street’s SPDR S&P 500 ETF, one of the world’s biggest. By comparison, Nvidia stock saw $23 billion, and Tesla came in at $22 billion. Just a few months back, silver ETF volumes were hovering around $2 billion daily, before climbing to $10 billion in December.

Meanwhile, S&P 500 futures are up 0.41%, with the Nasdaq 100 climbing 0.93%, and the Dow ticking up 21 points as Wall Street waits for the Fed’s interest rate decision and major tech earnings later today.