15. Jun 2022
You may be wondering why the price of gold has not taken off as inflation rises sharply. After all, despite initial increases, interest rates are now well below the rate of inflation - and historically that has usually been positive for gold prices.
But in financial markets, for various reasons, important price movements can occur after a time lag. In view of high inflation, this could also happen imminently with gold prices.
But what about the seasonality of gold?
Gold rises seasonally from the summer
Take a look at this seasonal chart of gold. This shows you the average course of the price of gold over 54 years depending on the season. The chart’s horizontal axis shows the time of the year, the vertical axis shows the price information.
Gold in US dollars, seasonal trend, determined over 54 years
Gold typically rises from July Source: Seasonax
From the seasonal chart you can see that gold falls seasonally from the end of February into June. Price rises then occur from July to early October, and then again from mid-December.
Festivities drive gold prices
Various festivities are in fact the reason for the seasonally positive phase for gold, from the beginning of July until the end of February. Gold is often given as gifts at all of these different celebrations and festivals. After all, gold is not only an investment and industrial metal. Up to two-thirds of gold annual production is actually spent on jewellery manufacture. So it's no wonder that jewellery production affects gold prices.
In turn, festivities which affect gold prices take place at different times of the year. On the one hand, there is Christmas towards the end of the calendar year. On the other hand, Asian festivals are at least as important to the market: the Chinese New Year in February and the wedding season in India in the fall. Jewellery dealers naturally stock up before the festive season - and thus the price of gold tends to rise beforehand.
Commodities and commodity stocks also offer you seasonal opportunities!
Inflation has arrived. Commodities and commodity stocks have been rising for months, while technology stocks have been falling.
But this also shows you that even in seemingly difficult market phases, there are good investment opportunities.
Just look at the interesting sectors.
Given high inflation, commodities are definitely an option to consider, including precious metals such as gold. But this also encompasses the shares of the companies that produce these commodities. There are thousands of them!
In view of the difficult situation regarding many shares, do not bury your head in the sand. Rather, turn it in the direction of the rising sectors!
Seasonality helps you identify a good time to buy.
Good luck with your trading and investing!
Founder and Chief Analyst of Seasonax
PS: Take advantage of the variety that the markets offer you. Seasonax helps you to do so!