Gold buyers light up with potential seasonal tailwind on the horizon

The precious metal endured a poor start to the week but has recovered quite nicely since. The drop on Monday didn’t even touch $2,600 before buyers stepped in around the 38.2 Fib retracement level of the rebound in the week before. That led to a bit of a tussle around the key hourly moving averages after. But today, buyers are finding renewed conviction in chasing a move higher:

With the push higher today, we’re seeing price action nudge back above both its 100 (red line) and 200-hour (blue line) moving averages. That suggests a more bullish near-term bias once again for gold.

On the month itself, gold is down by just 3% now. And that sets up its biggest monthly drop since September last year. It sounds “bad” but since then, this is only the precious metal’s third monthly decline out of fourteen. So, there’s your added context.

In any case, buyers are definitely continuing to show up on any dips and that is something to take note of.

Looking to December and January, these are typically months where gold tends to shine the brightest. However, with gold having already gained nearly 30% this year, does it justify even stronger gains based on the seasonal tailwind alone? That might be a tough one to figure out.

A key tail risk for gold is the same as what we saw earlier this week. That is you may never know what kind of volatility Trump may induce to markets. And he will be taking office on 20 January 2025. But one can reasonably expect him to start his agenda pushing at any point once we get to the new year.

Besides that, the Fed outlook will also remain one to watch. But as has been the case for gold this year, it can still rally strongly no matter the change in the odds. And with a more structurally bullish outlook still in place, it still presents a strong argument for gold to keep moving higher next year.

So, is there a thing as starting too early? We’ll see.

This article was written by Justin Low at www.forexlive.com.