In this article, Octa expert examines recurring seasonal gold patterns and their influencing factors.

Let's look at how seasonality and cyclicality affect gold prices.

Gold's upcoming seasonal phase is positive

A recurring pattern suggests a seasonally driven intense period for gold from the end of the year, starting in mid-December and lasting until about the second half of February. This is supported by research conducted by Seasonax, who analysed 54 years of data.

According to the data, the seasonal interim low usually occurred between 15 and 20 December, and the seasonal median high came at the end of February. There were years with no rise at all, but overall gold has been on the rise for 14 years out of the last 20 during the same two and a half months which amounts to a 70% probability of a price rise during this time. Average gains over this period ranged from 8.5% to 18%, and the losses were significantly smaller, from –1.6% to –3.3% marking it profitable every year since 2013. The cultural factor and investor sentiment support the rising trend of gold in the reported period as well.

Cultural factors increase the demand for jewellery during specific periods

Indian traditions require gold and gold jewellery to be part of the dowry. About 10 million weddings are celebrated in India every year, and the wedding season usually runs from October to March, when temperatures are more pleasant and religious festivals fall on weekends. That is why year after year the jewellery industry meets almost the entire annual gold plan in a reasonably short period.