Barring a major hiccup in the coming week, gold looks set to wrap up September trading with one of its best months since the breakout rally in 2024. And mind you, September typically isn't a great seasonal month for gold. After having slumped for seven Septembers in a row, gold is now poised for back-to-back September gains (2024-25) for the first time since 2009-10.
If anything, that speaks to the unrelenting momentum in the precious metal since the rally kick started last year. And even now at fresh record highs, it's tough to argue against a further advance in gold.
The fundamental factors that have driven the upside run since last year are not only still very much intact, but have arguably grown in conviction over the past year.
The Fed has finally gotten around to easing policy and with flagging US economic conditions, may have to stick on that path going into next year. Usually once the Fed starts cutting rates, they don't stop midway. So, there's that to keep in mind.
Then, you have the other usual suspects in play. That being demand for gold amid geopolitical tensions, global political uncertainty, and just a general inflation hedge as not everyone is convinced that prices are coming down.
Then, there's Trump amplifying all of that with a trade war and administrative policy incoherence over the past six months or so. That promotes a step away from the dollar (although TIC data seems to counter that argument), with central banks globally also steadily increasing their gold holdings - especially China.
Adding to that is the whole investor argument that ETF holdings have not been following the buying appetite in gold and that there are more bids set to flow in over time.
These bullish factors have been in place for a long while now and are still very much intact when you look at gold now. After the 27% gains last year, gold is now up around 43% this year already. That's quite something.
I'm a gold bull through and through but even I have to say that we might be overdue for a retracement/pullback some time. Then again, I've been thinking that as well since last year while continuing to scale in on every decently attractive opportunity.
But looking to the months ahead, it might present an interesting conundrum for gold traders. The December to January months is typically the strongest seasonal period for gold. Will we see some profit-taking and cooling off before that? Or will we get a repeat of 2024 where gold instead actually cooled during those months before running up after?
