Another really notable seasonal trend around this time of the year is gold strength ahead of the Chinese Lunar New Year. Demand for physical gold around this time often lifts spot gold prices.

Over the last 15 years, gold has risen 11 times. The largest gain was nearly 20% in 2009. The largest fall has been -5.45% in 2013. The percentage of winning trades has been 73.3%. The question this year is whether gold can once again show its strong seasonal trend?

Major Trade Risks:

  • The main risk to this seasonal pattern would be on USD strength which is a natural headwind for gold.
  • Another key risk is if real yields keep rising alongside USD strength as this usually pressures gold sharply lower.
  • Also, note that with Bitcoin’s sharp rise last year some investment that went into gold as an inflation hedge went into Bitcoin instead. This means there are questions surrounding gold’s short term reputation as an inflation hedge.

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