In statistics, many time series exhibit cyclic variation known as seasonality. For precious metals investors, understanding seasonality can help to determine when to buy and sell at optimal price points. Analysts often mention gold’s seasonality and refer to the “Summer doldrums” as a buying opportunity and the Winter months as the high season. To verify gold’s seasonality and identify opportunities to profit from the trends, I decided to update the data and charts that I had originally created a few years ago. The new chart has some variations from the past, but the overall trends remain mostly the same.
The Winter months remain the strongest seasonal period for gold, particularly November through February. The Summer months tend to be the weakest seasonal period for gold, with the month of June showing the only average decline. May and September are anomalies, when the gold price tends to advance strongly during these months, but not in the immediate month before or after.
Here is the chart in bar format as some prefer…
And lastly, a chart with the 1.5% average monthly gain indexed at 100…
Heading into the first full week of November, the charts suggest that investors can expect the gold price to advance sharply this month and continue higher through February of next year. This is partly due to gold dowries for marriages in India, as this period is considered a lucky time of the year to get married.
Of course, these data points are averages are there are always variations and outliers. Nevertheless, this is an important tool that investors may find beneficial in deciding the best time to buy more gold or take some profits off the table.
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