Market Analyst

Total Content 16

Articles 16

Gold December Seasonals

By Ashraf Laidi  |  12/12/2017 15:33
by Ashraf Laidi

Gold traders awaiting this week’s Federal Reserve decision are keeping a close eye on the all-important December seasonality in the yellow metal. In December of each of the last four years, gold put in a cyclical low. As gold drops to 5-month lows today, will it hit bottom this month, or more losses are in store for the next quarter?

Recall this same time last year, gold was heading for a 3-month consecutive decline, falling 18% on USD optimism emerging from market anticipation that president Trump’s planned infrastructure program would spur bond yields higher and lift inflation expectations, alongside a tax on US imports, which would favour home production and boost USD-bound flows. None of the above materialized due to Trump’s failure in passing either program.

Will it be different this time?

Yet even without last year’s lofty optimism in the US dollar, gold remains increasingly challenged. The latest selloff is partly caused by stabilisation in the US dollar emerging on tightening US labour markets and steady growth both permitting the Fed to remain on track for further interest rate hikes ahead.

But is there more? It can be said the latest surge in prices of cryptocurrencies has pushed many of the longstanding goldbugs (who wished to avoid central banks’ arbitrary debasing of fiat currency) into the likes of bitcoin, ethereum and litecoin, as these have performed far above and beyond the price of bullion. Net longs in gold futures contracts by speculators have hit 4-month lows at a time when interest in energy commodities increased rapidly.

The 20% increase in oil since the start of the year could work in favour of gold if inflation is expected to push higher without adequate response from the Federal Reserve. Instead of focusing on the US 10-year yield level of 2.40%-2.45%, we must focus on the extent to which yields exceed inflation (core PCE prices). This is known as the real yield, currently at 0.95%. Only a clear break above 1.05%-1.10% would translate into new momentum of gold selling, presented by bond yield’s eroding the power of bullion.

Key support

Gold is quickly nearing the $1210-15 key support, lying on the December 2015 trendline. We would have a to see a weekly and monthly close below $1200 to consider the sell-off conducive to the next low of $1130-35, a potential right-shoulder support on the inverse head and shoulder formation. The ability to hold near $1210 should raise chances of a gradual rebound towards $1300.


Author's Other Opinion & Analysis

  • NAFTA Theatre & USD/CAD
    By Ashraf Laidi  |  05/04/2018 15:37

    There is far too much scepticism about a NAFTA deal.

  • No Intervention can stop USD/JPY
    By Ashraf Laidi  |  23/03/2018 15:07

    As USD/JPY breaks below 105 for the 1st time since November 2016, discussions, and predictions on whether Japanese authorities will jawbone the currency are resurfacing.

  • Trade Time-bomb: The 4 Key Events
    By Ashraf Laidi  |  16/03/2018 15:29

    Tension surrounding tariffs

  • Jobs no FX Game-Changer
    By Ashraf Laidi  |  09/03/2018 16:42

    Today’s report is a fresh confirmation of the status quo

  • Euro Sentiment (You’re reading it wrong)
    By Ashraf Laidi  |  07/03/2018 17:16

    Here is a reminder on how to approach a popular metric in a different way.

  • Gold Bulls Want this from Powell
    By Ashraf Laidi  |  27/02/2018 11:08

    With Ashraf Laidi

  • USD Questions & Answers
    By Ashraf Laidi  |  16/02/2018 17:24

    With Ashraf Laidi

  • Dangerous Bottoms
    By Ashraf Laidi  |  09/02/2018 17:40

    As the S&P500 and Dow Jones Industrials Average indices Index post their fourth 10% decline over the past 4 years, we ask whether a violent spike is afoot, or further erosion is underway.

  • Jobs Halt USD Erosion for Now
    By Ashraf Laidi  |  02/02/2018 16:03

    A strong January US jobs report finally saves the day

  • Mnuchin, Draghi & Trump on FX
    By Ashraf Laidi  |  26/01/2018 16:23

    Will president Donald Trump’s comments about a stronger US dollar succeed in boosting the US currency?

  • Yen-Yields Divergence
    By Ashraf Laidi  |  19/01/2018 17:41

    When a long-held market correlation begins to break, we wait to see if the divergence is temporary before making predictions whether the disparity will continue or not.

  • On USD’s Broad Tumble
    By Ashraf Laidi  |  12/01/2018 17:17

    by Ashraf Laidi

  • The Loonie's at it Again
    By Ashraf Laidi  |  08/01/2018 14:23

    By Ashraf Laidi Another stellar jobs report from Canada is the latest driving force behind the Canadian dollar. Will the loonie steal the show again this year?

  • China Goes Easy on Debt
    By Ashraf Laidi  |  20/12/2017 15:00

    By Ashraf Laidi

  • 6 Reasons for the Dollar Decline
    By Ashraf Laidi  |  14/12/2017 12:44

    We delve deeper into the main reasons behind the dollar slump.

Show More Articles


Open a Demo Account Open A Live Account

Losses can exceed deposits


The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice.

If such information is acted upon by you then this should be solely at your discretion and GKFX will not be held accountable in any way.

  • ForexF
  • IndicesI
  • CommoditiesC

        Login to Market Insight Account

        Your Market Insight account gives you access to the tools that we offer our customers including our
        Technical Studies & Sentiment for your accounts.

        Forgot Password?

        Don't you have a Market Insight account? With a few easy steps you can easily register to Market Insight

        Create a Market Insight's Account

        Your Market Insight account gives you access to the tools that we offer our customers including our Technical Studies & Sentiment for your accounts.


        Thank you!

        Welcome to Market Insight family!

        You have succesfully completed the registration.
        We will send you an e-mail to give you some
        instructions and our Terms and Conditions!
        Our account representatives will be contacting you as
        soon as possible. If you have any further questions
        please do not hesitate to mail us via