Gold: Seasonal Rally In Order?
I don’t know about you, but it sure seems like the world is going to hell in a hand basket…
Israel and Hamas are in a ground war in Gaza. ISIS is slowly overtaking Iraq. Civil war has consumed Syria. Pakistan and Afghanistan are becoming increasingly unstable. Al Qaeda is expanding into the Arabian Peninsula.
Watching the evening news is getting mighty depressing.
Of course, the most concerning conflict has to be the one in Ukraine…
According to various news sources, Russia is increasing the number of combat ready troops on the Eastern Ukraine border. That has many experts, including NATO, fearing Russia is on the brink of invading its western neighbor.
Upon hearing the news this week, investors rushed into gold. As you may know, the yellow metal is one of the first assets investors look to in times of geopolitical crisis.
With gold jumping $20 an ounce in the past two trading sessions, the technical picture is changing quickly.
Take a look…
As you can see, gold failed to test the $1,250 low set in early June. The fact the metal failed to test the recent swing low before rallying is another feather in gold bulls’ hat.
But more importantly, the yellow metal is rallying towards an important resistance area (red line). If the metal can trade above this pivotal area on geopolitical concerns, the odds grow dramatically for a strong rally into year-end.
Remember…
August through December is a historically strong time for gold.
In fact, in 20 of the past 30 years, gold gained an average of 19% in the late summer to early winter time period. If gold sticks to this seasonal pattern, it will be trading in the $1,500 area by year-end.
How do you capitalize on a potential year-end rally in gold?
As you may know, the SPDR Gold Trust (GLD) is one of the easiest ways to hitch your portfolio to a rising gold price. The highly liquid ETF trades in lockstep with the price of gold bullion.
Until Next Time,
Justin Bennett
Category: Gold
