Seasonality in Gold looks to be favouring Gold bulls

October 28, 2020

Source: Economic Events October 28, 2020 – Admiral Markets’ Forex Calendar

While Gold is still waiting for impulses and continues to trade around 1,900 USD, tensions are building and sooner than later traders can expect a sharp increase in volatility.

While a potential trigger event is certainly the upcoming US presidential election on the 03rd of November (next Tuesday), it is not guaranteed due to a sharp rise in regards to risk appetite, respectively risk aversion, among market participants.

While Democrats and Republicans have not yet agreed on a deal for an economic relief package, it seems traders should prepare to see Nancy Pelosi and Steven Mnuchin come up with an optimistic outlook on continued stimulus talks right after polls are closed on Election Day.

As we already pointed out, a final deal between Democrats and Republicans will potentially fall into a time which is historically known to be bullish for Gold from a seasonal perspective (December/January). This could drive the price of Gold significantly back above 2,000 USD – only with a small delay.

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In fact, extending this seasonal view on the yellow metal shows that the current “weakness” in Gold has usually been a good buying opportunity, at least in the time period from October 1986 to now.

Still, we remain cautious in regard to long engagements below 1,975 USD on a daily time-frame, but keep this level in mind since it could be the initial bullish catalyst that drives Gold up to its current yearly and All-Time highs around 2,075 USD or even higher:

Source: Admiral Markets MT5 with MT5SE Add-on Gold Daily chart (between June 12, 2019, to October 27, 2020). Accessed: October 27, 2020, at 10:00 PM GMT. Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of Gold fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, and in 2019, it increased by 18.9%, meaning that in five years, it was up by 28%.

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