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?
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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