A stock market crash is a shocking event for investors and the gold price is not immune to dropping during these events. But how badly is gold affected?

Defining a stock market crash

First of all we need to distinguish the difference between a stock market crash and a bear market. A crash in stocks involves a sudden dramatic and substantial drop in price where selling is panicked. There is no strict definition of a crash in terms of the magnitude, however it would be reasonable to suggest more than a 10% drop in price over a period of days.

In contrast, a bear market involves a prolonged decline in price, with intermittent rallies in between. The selling is not so panicked and occurs over months and sometimes years.

We have experienced a number of crashes in history and we will focus this discussion on stock market crashes that occurred during the fiat era. Prior to the fiat era, the gold price was fixed by the government and so was not affected my market forces.

We will look at the following stock market crashes

  • The stock market crash of 1987
  • The crash during the 2008 bear market
  • The flash crash of 2010
  • The 2020 stock market crash

The stock market crash of 1987

Gold price compared to S&P500 in the crash of 1987

On 19th October 1987 the S&P500 suffered a big one-day drop in price. The chart above shows the S&P500 index in bars, and the orange line represents the closing price for gold. Note that these charts are simply overlaid, therefore the scales are very different. Although this chart gives us an impression of direction of price movement it doesn’t tell us about the relative magnitude of the change in price.

Percentage changes in gold price and S&P500 in the 1987 crash

An alternative way to look at this is using a chart of percentage changes in price as shown above. When we specifically look on that one day, the 19th of October and document the highs and lows of the day for both gold and the S&P500, the price of gold dropped 2.75% whereas the S&P500 dropped over 20%. That’s approximately a 10 times difference in percentage price change!


Gold price vs S&P500 in 2008

The bear market of 2008 did include some days where stock prices were crashing and so we will specifically look at the crash in prices from 29th September to 10th October 2008 shown in the chart above.

Percentage change in gold price vs S&P500 in 2008

On the percentage chart shown above, the gold price dropped just over 10% during the defines crash period whereas the S&P500 dropped by over 30%, that is three times as much in percentage terms.

Flash crash of 2010

Gold price vs S&P500 in 2010 flash crash

A flash crash in the S&P500 occurred in May 2010 as shown in the chart above. Look at the closing prices, gold actually moved up during the stock market crash.

Percentage change in gold price vs S&P500 in 2010 flash crash

When we look at the percentage changes in the chart above, again the closing price it actually moved up over that time. However, if we look at the peak price at the start of the crash to the low of the day at the end of the crash, gold actually only dropped 1.67% whereas the S&P500 dropped 11 % over that time.

The 2020 stock market crash

Gold vs S&P500 in the crash of 2020

That brings us to the crash of 2020 from 21st February 23rd March as shown in the chart above.

Percentage change in gold price vs S&P500 in the crash of 2020

Looking at the chart in percentage terms (chart shown above) the price of gold dropped 10% overall, whereas the S&P500 fell 34%.


All of the stock market crashes discussed have one thing in common: The price of gold fell significantly less than the stock index did. One reason why gold price falls when there are is a stock market crash is that there is an initial run to cash, and margin calls force traders to sell their gold to raise liquidity. The other notable observation is that the gold price tends to bounce back before the stocks. This may be due to a move to gold as a safe haven during stock market turmoil.

Gold mining stocks are also affected during a stock market crash, this post explains how.