Gold Weakness to Persist as Seasonal Factors Weigh

Charts, Commentary, Gold, News

Gold tends to post seasonal bottoms in late June or early July (shaded in chart below), as demand increases when jewelers again stock up ahead of the seasonal wedding event in India. Gold prices are also subject to spikes in demand from the investment community, as a hedge or protection from concerns over inflation or during times of economic instability or uncertainty. It is valued in terms of the U.S. dollar, so periods of dollar weakness can support gold’s value. Uncertainty over trade and tariffs does exist and has existed for some time now. During this time inflation (official metrics) has remained subdued while gold has been trending lower. The trend of lower gold is likely to continue.

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Shorting an August gold futures contract before Memorial Day and holding until the end of June has been fruitful in 29 of the last 44 years for a success rate of 65.9%. This trade’s best year was 2013 when stocks put up their best yearly performance in more than a decade. This trade has worked in 10 of the last 13 years.


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As always, please use protective buy and sell stops when trading futures and options.

Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

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Jeffrey A. Hirsch is Editor in Chief of the Stock Trader’s Almanac. His latest book "The Little Book of Stock Market Cycles" (Wiley) was published in August 2012. As a frequent participant in the MrTopStep IM-Pro Trading Room, he shares trading insights with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.


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