Minus this year's huge climb for gold during the first six months of 2016, precious metals almost always run in cycles dependent upon which part of the year it is. June and July have historically been bad months for gold and silver, primarily because investors 'leave in May and go away' until around Labor Day when market volume once again picks up.
This trend has once again fallen in line as gold has found heavy resistance over the past three months, and has been unable to push through the $1360 level which is the springboard to the next move higher. But historically that is about to change as we are about to enter into the best month of the year for gold.
Gold bullion has had its biggest gains in September over the past 20 years. Seasonally gold is entering the sweet spot with the Autumn being gold’s best season and with September being gold’s best month in the last 20 years.
Given the backdrop of one of the most uncertain macroeconomic, systemic, geopolitical and monetary outlooks both the U.S. and the world have ever seen, we are likely to see gold do well in its traditionally seasonal strong period. Possibly, the most vitriolic, hateful and divisive election in U.S. history is set to be witnessed and this will likely lead to considerable volatility in markets and should see the dollar come under pressure. The election date is Tuesday, November 8, 2016.
The spring and summer months frequently see seasonal weakness, since gold became a traded market in 1971. Gold bullion often sees periods of weakness in the summer doldrum months of May, June and July.
August tends to be a better month for gold but not this year with gold down nearly 2% in dollar terms, 3% in euro terms and 1.8% in sterling terms.
Gold’s traditional period of strength is from August through to January and February with weakness and a correction frequently seen in October. Thus, August is generally a good time to buy after the seasonal spring and summer dip. - Goldcore