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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Price Up 3% In October and Enters “Seasonal Sweet Spot”

Commodities / Gold and Silver 2015 Oct 30, 2015 - 03:20 PM GMT

By: GoldCore

Commodities

- Gold down 1.3% this week on Fed “noise”
- Gold up 3% in October on robust demand
- Stronger gains in euros, Swiss francs, Japanese yen
- October poor month for gold seasonally
- November, December, January and February the “seasonal sweet spot”
- Confirmation of surging demand for bullion in Germany, India and China in Q3


Gold is headed for a 1.3% fall this week after the Fed’s latest suggestion that they may increase interest rates in December or in the New Year. However, for the month of October gold is 3.1% higher from $1,115/oz to $1,150/oz and has seen even larger gains in other currencies.

Gold’s Seasonal Performance – U.S. Global Investors (1969-2010)

This strong performance in October comes despite October being traditionally a weak month for gold. This bodes well as we enter the “seasonal sweet spot” for gold.

Seasonally, while October is a weak month for gold, the months of November, December, January and February are positive months for gold. October often sees declines in the gold price followed by strong gains in November, December, January and February (see table above and chart below).

Today sees the end of October trading.  November is, after September, one of the strongest months to own gold. This is seen in various data showing gold’s monthly performance over long time frames – 1975 to 2015 and indeed more recent time frames – 2000 to 2015.

Autumn and winter is the seasonally strong period for the precious metals.

This is believed to be due to robust physical demand internationally and especially in India for weddings and festivals. More recently, the emergence of China as the largest gold buyer in the world and their massive gold buying into year end as jewellers and bullion dealers stock up for Chinese New Year has reinforced and exacerbated this long seen trend.

It may also be related to traders being aware of the seasonals and therefore leading to self fulfilling price gains or price falls in certain months.

The fundamentals including the current macroeconomic, systemic, geopolitical and monetary conditions are positive for gold. These fundamentals in conjunction with the strong seasonals suggest higher gold prices are likely in the coming months.

Given the bullish fundamentals and the fact that gold already looks oversold with very poor sentiment today, any further weakness is likely to be short term.

Bullion buyers expect higher prices due to a combination of geopolitical, macroeconomic and monetary risk.

Geopolitical risk remains high given increasing chaos in much of the Middle East and rising tensions between NATO and Russia. The Middle East is increasingly volatile and we appear to on the brink of a war in the region. This comes at a time of deep tensions with an increasingly assertive Russia.

Given the confluence of still elevated geopolitical, systemic and monetary risks,  we are bullish as we enter the seasonal ‘sweet spot’ for gold in the November, December, January and February time frame prior to Indian festivals and Chinese New Year demand.

Gold looks quite strong and appears to have bottomed during the summer – this is especially the case in euros, pounds and even more so in currencies such as the New Zealand dollar and the Australian dollar.

The technicals have improved too and these allied with the strong fundamentals – of an uncertain global economy, volatile and vulnerable stock markets and robust global demand for gold, particularly from China, India and Germany – are positive.

This week came confirmation that contrary to the widely held belief that gold demand is subdued it is actually very robust and indeed surging in key markets. Surging demand for coins and bars and a rise in buying by central banks pushed physical gold demand up 7% in the third quarter.

Demand for gold coins and bars jumped by 26% year-on-year in the last quarter, GFMS analysts at Thomson Reuters reported in the Q3 update of their Gold Survey 2015. Retail investment surged in top consumers India, China and Germany, with buying rising 30 percent, 26 percent and 19 percent respectively. Those three markets alone accounted for an additional 26 tonnes of bullion buying.

Despite the ongoing Federal Reserve “noise” to the contrary, ultra loose monetary policies are set to continue for the foreseeable future which is highly supportive of gold and will lead to continued demand for bullion internationally.

We continue to believe our long held view that these conditions will lead to new real, inflation adjusted record highs for gold over $2,400/oz in the coming years.

DAILY PRICES
Today’s Gold Prices: USD 1147.75, EUR 1042.70 and GBP 748.04 per ounce
Yesterday’s Gold Prices: USD 1159.00, EUR 1057.38 and GBP 759.28 per ounce.
(LBMA AM)

Gold was down again yesterday, losing $11.00 during the day to close at $1145.80. Silver was down $0.39 yesterday closing at $15.60.  Platinum lost $10 to $988.  Gold is 1.3% higher for the week but 3% higher for the month (see chart above).

Special Offer This Month Expires Today

Gold Bars (Perth Mint 1 oz) at 2.25% premium for storage in London or 2.75% premium for delivery is a great deal, if not one of the best in the market today. It is a 40% savings in premium as normal premiums are between 3.75% and 4.5% over spot or the live market price.

To avail of these excellent premiums while gold prices remain depressed, please call our bullion team on the numbers below

IRL +353 (0)1 632  5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

Download Essential Guide To Storing Gold Offshore

Download 7 Key Storage Must Haves

This update can be found on the GoldCore blog here.

Mark O'Byrne

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

W http://www.goldcore.com/uk/

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

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