Seasonality Says Gold Rises From Here

Right now marks a fairly predictable ‘bottom’ in the annual calendar of gold prices.  As the chart below illustrates August tends to be the last visit to the Support line of price patterns for the year.  Gold supply tends to be fairly constant so this is no seasonality out of supply but, rather, demand.

From now on (Autumn in the northern hemisphere) the gold price traditionally strengthens on a number of predictably sequential events.

Firstly we have the Asian harvest season after the monsoon rains and many of these Asian farmers place a large portion of their profits into gold.  Straight after this we then get the Indian wedding season where gold and gold jewellery is the present and dowry of choice.  That then heads into the ‘western’ festive season where jewellery demand then surges too.

This year is a little special too as we have a US stock market at nose bleed average trailing-twelve-month price-to-earnings ratio of 27.2x.  Whilst the ETF GLD gold buying has taken a rest, any hiccup or crash in shares will almost certainly see them pile in again.  As we reported Friday, ETF inflows have been at record levels to date.  That financial crashes ‘traditionally’ happen in September and October and there is a highly charged US election in November just adds to the potential of this seasonal trend.