Dear Investor,
You have probably already heard gold’s outstanding performance this year. Among the major asset classes old has beaten most of its competitors from last year and the start of this year. Between October 2023 and April of this year, the price of gold has almost doubled at its peak. These strong moves have obviously delighted gold investors. However, the price of gold has now been correcting for over two months. A correction is quite normal after such a strong rise. However, many investors are now asking themselves what the future holds for the gold price. Is the move finally over?
The seasonality speaks for gold again!
Let’s take a look at the answer provided by seasonality.
Take a look at the seasonal chart of gold. It shows the typical trend depending on the time of year. For this purpose, average values are formed from the price returns of a total of 25 years. This allows you to recognize the seasonal trend at a glance in the seasonal chart.
Gold, seasonal trend, calculated over 25 years
Gold rises seasonally from the summer. Source: Seasonax
The seasonal chart shows that the beginning of July – at the time of writing! – is a low point. The best seasonal entry point for gold is marked with a red arrow. It is July 6. After that date, gold typically begins to rise. The seasonal rise lasts until the second half of February of the following year (on the left-hand side of the chart).
In 21, of the past 25 years, gold rose in the period between July 6 and February 24 of the following year. The average gain was almost 10 percent. In the remaining period, i.e. between February 24 and July 6, there was a slight loss on average.
There are good reasons for the seasonality of gold!
Why does gold typically start to rise in the summer? The reason lies in demand for jewelry. Around half of current gold production goes into jewelry. production. This has a considerable influence on the price. The Indian wedding season in the fall, Christmas in December and the Chinese New Year in February cause the demand for gold to rise seasonally.
Many purchases by jewelers take place in the run-up to the respective festivities. As a result, demand for gold tends to increase from the summer onwards, which shapes the typical seasonal trend in the gold price.
Take advantage of seasonality!
As you can see, the phase between July 6 and February 24 of the following year is seasonally very good for the gold price. The outperformance that gold achieves in this period is remarkable. The probability that the correction in gold will soon be over and the bull market will continue is therefore increased. So seasonality says don’t be afraid to stay invested in gold!
Incidentally, seasonality is also a significant factor influencing the price of other commodities, equities and currencies.
You can use the seasonality of investing to positively influence the probability and amount of your returns.
Take advantage of this easy-to-implement opportunity to increase your profits!
Best regards,
Dimitri Speck
Founder and chief analyst of Seasonax
PS: Seasonax helps you with your investment decisions!
