Looking to the Futures

Although gold is often thought of by investors as an inflation and currency hedge for portfolios, historic numbers tend to show positive correlations between the metal and equity indexes through bull markets.  This correlation factor, although positive, tends to be weaker than during periods of high inflation.  This begs the question for our current economic environment.  Are we in a bull market or a period of high inflation? 

As of right now Gold Futures (/GC) are strongly correlated with the E-mini S&P 500 (/ES) index future sitting at a reading of positive 0.71486.  According to the U.S. Bureau of Labor Statistics, Core CPI (Consumer Price Index) measuring all items came in with a reading of 4.2 percent during May representing its highest point since April 2023. 

Common indicators that could define a bull market include strong GDP (Gross domestic product) growth, high liquidity, increases in merger/acquisition/IPO (initial public offerings), and strong corporate earnings. 

Looking at a five year chart of GDP from the FRED website or St. Louis Federal Reserve, we notice strong GDP growth from 22 trillion to 32 trillion. 

From a liquidity perspective, money market funds (total financial asset levels) equal 8.2 trillion as of Q1 2026 according to the FRED site.  Kevin Warsh, the new Chairman of the Federal Reserve who replaced Jerome Powell, did mention that he plans to cut the Fed’s balance sheet which will arguably decrease liquidity in the market.  This is also known as quantitative tightening. 

IPO activity in 2026 has picked up substantially from a notional perspective compared to 2025.  Year to date we have seen 73 IPOs, which excludes the 108 SPAC offerings, compared to last year’s 347 IPOs in total.  While that number is lower the total proceeds of 110.9 billion year to date raised already trumps the 70 billion for all of last year. 

US corporate earnings are also experiencing a period of substantial growth.  With roughly 79 percent of companies beating analyst estimates, the S&P is expected to produce earnings growth of 24 percent year over year. The historical median expected earnings growth by S&P companies sits at 10.7 percent. 

While there isn’t one key likely factor contributing towards this market’s returns, it is important to consider the implications of both sides.  Based on the correlation reading between gold (/GC) and (/ES), it suggests that higher than expected inflation is driving asset returns as opposed to a strong bull market.  Correlations between gold and equities do not always remain positive.  Although this indicator is not to be seen as a fear gauge, it can be leading for investor expectations surrounding periods of uncertainty.  If the correlation turns negative for a prolonged period of time, such as the Dot-Com Bust (2000-2002) the Global Financial Crisis (2008) or the Covid-19 Pandemic (2020), gold tends to outperform as a tangible store of value. 

One other contributing factor that could strengthen the current correlation between gold and equities would be the strong demand for the commodity in certain sectors that contribute to their growth percentage.  One such example would be data centers.  Gold is highly conductive, immune to corrosion, and extremely malleable. US tech giants are on track to spend roughly 700 billion for the year on data center infrastructure, which is up from 387 billion in 2025.  The hyperscalers or “big four” are projected to put 80-90 percent of their total CapEx spend towards data centers.  It is estimated the Amazon is projected to spend 200 billion in CapEx, Google (Alphabet)190 billion, Microsoft190 billion, and Meta 135 billion. 

Natural gas futures (/NGN26) ended Friday’s session higher (+1.07%), supported by forecasts for near to above-normal temperatures as summer begins, which could boost cooling demand.

The National Weather Service’s Climate Prediction Center expects temperatures from June 18 through June 24 to run from near normal to above normal across the lower 48 states.

The U.S. Energy Information Administration (EIA) reported that U.S. natural gas inventories increased by 108 billion cubic feet (Bcf) during the week ending June 5. That was above expectations for a 101 Bcf storage build. U.S. gas inventories are currently 6% above the five-year average and 0.2% below year-ago levels.

Coffee futures (/KCU26) ended the week higher (1.26%) as forecasts called for heavy rainfall across Brazil’s key coffee-growing regions, raising the potential for harvest delays.

Euro FX futures (/6EU26) closed higher on Friday (+0.14%) after the European Central Bank (ECB) raised interest rates by 25 basis points on Thursday and revised upward its inflation outlook, which could signal additional rate hikes in the coming months. 

Major economic reports, trading events, and news items that could potentially impact specific futures markets:

Import price index at 8:30 am ET

Import price index minus fuel at 8:30 am ET

Housing starts at 8:30 am ET

building permits at 8:30 am ET

New futures products are available to trade with a futures-approved account on all thinkorswim platforms: 

• Ripple (/XRP)
• Micro Ripple (/MXP)
• 100 OZ Silver (/SIC)
• 1 OZ Gold (/1OZ)
• Solana (/SOL)
• Micro Solana (/MSL)

Visit the Schwab.com Futures Markets page to explore the wide variety of futures contracts available for trading through Charles Schwab Futures and Forex LLC.