The seasonal chart for gold, covering a 15-year period from August 2009 to August 2024, highlights a notable pattern of weakness in gold from early September to early October. This period historically correlates with a downturn, with a marked annualised return of -30.42% during this window. September often marks the start of a downtrend for gold prices. The historical data show that trades during this period have a losing streak, with only 20% winning trades compared to 80% losing ones.
The winning trades, when they occur, are modest in comparison. The period is also characterised by increased volatility (16.90%), which implies greater price swings but predominantly to the downside. The combination of high volatility and predominantly bearish returns suggests a challenging period for gold bulls. The US dollar continues to face selling pressure, driven by falling yields and expectations that the Fed will cut rates soon. This environment is super supportive of gold and silver, both of which have been rallying recently. The weaker dollar at the moment has helped push gold higher, and as long as yields keep trending lower, this momentum could continue. However, how long can the run last?
Given this strong seasonal trend, market participants may want to exercise caution if holding long positions in gold during the early September to October period. The data suggests a historically reliable pattern of gold declining in September.
Technically gold made fresh highs last week with a record all time close. The momentum is clearly with the buyers and the next major weekly pivot points overhead sit at 2535 and 2566 marked as R1 and R2 on the chart below. Those are the next near term target for present buyers.
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As always, while seasonal patterns provide valuable insights, it is crucial to consider the current macroeconomic environment, geopolitical factors, and broader market trends to complement this historical perspective.
Remember, don’t just trade it Seasonax It!
