August is a very strong month for gold from a seasonal perspective. Now, the physical demand for gold is unlikely to match previous years due to COVID-19 related restrictions, but Jerome Powell’s dovish hold from last week’s FOMC meeting could allow gold to race higher on a weaker USD.

Over the last 10 years, gold has risen a total of 6 times in 10 years between August 01 and September 01 with an average return of +3.43%. The largest gain was in 2011 with a 12.79% gain.

Major Trade Risks: If there are hints that the Fed is starting to consider bond tapering at the August Jackson Hole Symposium then watch out for USD strength, which could weaken gold.

Gold is a commodity that has long been considered a store of value. Its appeal to investors has been timeless and many portfolio managers will keep an allocation in gold as a hedge against inflation.