Gold’s rally broke down in May. It’s still doing better than stocks.

Gold is still up 25.1% this year, far outpacing the S&P 500’s 0.5% 2025 gain.

The price of gold’s retreat has coincided with a broader stock market rally. Investors bought gold in April as worries about the U.S. spiked amid President Donald Trump’s trade war, so some market participants took profits as tensions faded.

It’s no coincidence that gold hit a record of $3,411.40 per troy ounce on May 6 before retreating: that’s right when the White House said Treasury Secretary Scott Bessent would meet with China to discuss trade.

Talks between the U.S. and China took place on May 10 in Switzerland. Gold pulled back while stocks rallied the following week, as traders reacted to news the U.S. would lower tariffs on China to 30% while both sides hammered out a deal.

Fundstrat’s head of technical strategy Mark Newton argues that precious metals like gold look to be near the end of their recent consolidation, meaning they could push back to fresh records in the months ahead.

“Safe-Haven trades like Japanese Yen and Gold should be starting to turn back higher, and I expect that Equities can still rally despite this happening into mid-June,” Newton wrote in a Friday note. “I favor Industrials, Financials, Technology and Utilities, while Emerging markets also have appeal given the drop in the US Dollar.”

Of course, the next move for gold may have more to do with the Trump administration’s trade talks with China. Tensions have been higher in recent days, with Bessent saying on Thursday that talks had “stalled.”

Trump on Friday said China has “totally violated its agreement with us.” U.S. Trade Representative Jamieson Greer later that day told CNBC that China failed to restore exports of some rare-earth magnets used for electric motors.

“Recently, China has repeatedly raised concerns with the US regarding its abuse of export control measures in the semiconductor sector and other related practices,” Liu Pengyu, a Chinese embassy spokesperson, said in a statement on Friday. “China once again urges the US to immediately correct its erroneous actions, cease discriminatory restrictions against China and jointly uphold the consensus reached at the high-level talks in Geneva.”

The market isn’t taking the latest back and forth too seriously: Stocks barely moved on Friday. And gold? It fell 0.9%.

Write to Connor Smith at connor.smith@barrons.com