Gold’s Summer Doldrums Normally See Weakness but Fundamentals Could Lead to Surge

Gold is trading at $1,530.01/oz, €1,054.70/oz and £936.08/oz. 

Gold and silver are lower again today in most currencies after yesterday’s falls. Gold has risen marginally in British pounds (GBP 938.41/oz) as sterling is lower (see cross currency table) with the weak services sector PMI data highlighting the weak U.K. economy and increasing risk of stagflation.

Gold Prices – Fixes – Rates – Volumes

Gold has entered the ‘summer doldrums’ and traditionally seasonal factors result in weakness in the precious metal markets, particularly in June and July.

The summer months normally see seasonal weakness and it is thus a good time to buy on the seasonal dip. This has been the case in recent years and was seen again last year when gold rose in June, fell sharply in July (leading to usual ‘bubble has burst’ nonsense, and then rose strongly from late July until December (see chart below).

Gold’s traditional period of strength is from late August into the autumn and early winter.

Gold in U.S. Dollars – 2 Years (Daily)

Gold’s seasonality was shown in a recently published graph by UBS which showed how June and July are gold’s weakest months (see chart below).

Buying gold during the so-called summer doldrums has been a winning trade for most of the last 34 years and especially in the last eight years, averaging a gain of nearly 14% in just six months after the summer low.

Commentators such as John Embry, James Turk and Jim Sinclair who have called the market right for some time say that the extraordinary macroeconomic, monetary and geopolitical risk in the world today could see gold and silver bullion prices surge this summer.

Cross Currency Rates

New buyers should, as ever, avoid attempting to “time the market” and consider cost averaging their purchases to ensure that they do not miss the gold and silver boats. 

SILVER
Silver is trading at $35.58/oz, €24.46/oz and £21.71/oz.

PLATINUM GROUP METALS
Platinum is trading at $1,807.50oz, palladium at $769/oz and rhodium at $2,275/oz.

NEWS

(Bloomberg) — Gold May Gain on Growth Outlook, European Debt, Survey Shows

(Reuters) — Gold steady on weak dollar; US payrolls eyed

(MarketWatch) — Gold futures edge lower as dollar rises

(Reuters) — US Senate bill would force CFTC to act on position limits

COMMENTARY

(King World News) — Embry – Silver’s Drop is JP Morgan Trying to Protect Their Ass

(Zero Hedge) — John Taylor: "Next Year Is Going To Be Truly Miserable" And QE 3 Will Come

(Barrons) — Gold, Silver Advance As Dollar Drops; Silver Inventories Keep Dropping 

Mark OByrne

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