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Gold

Gold tends to rise at this time of year due to strong demand from China for the Chinese Lunar New Year. Over the last 32 years gold has risen 21 times between December 23 and February 17. The average gain has been +2.85%. The largest gain was in the QE world of 2008 with a whopping +14.76% profit. With the Fed committing to ultra loose easy monetary policy is this the best time to buy gold now?

Trade Risks:

  • The main risk to this trade is if there is strong risk off trading heading into year end on the US stimulus bill not being passed.

  • Another key risk is a large increase in gold ETF selling. It has steadied recently, but an acceleration in selling could drag gold prices lower.

  • A cancellation of the Chinese Lunar New Year holiday.

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High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure. *Any opinions made in this material are personal to the author and do not reflect the opinions of HYCM. This material is considered a marketing communication and should not be construed as containing investment advice or an investment recommendation, or an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. HYCM does not take into account your personal investment objectives or financial situation. HYCM makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast, or other information supplied by an employee of HYCM, a third party, or otherwise. Without the approval of HYCM, reproduction or redistribution of this information isn’t permitted.

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