Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield. That scenario implies bullion will be helped if the Federal Reserve declines to raise rates later this month.
“Over the last 48 years, the highest average returns were recorded in January (2.0%), followed by July (1.58%), May (1.57%) and November (1.37%). On the other hand, the worst months for the gold investors were October (-0.48%) and June (-0.38%). As can be seen, the best seasons for gold are winter (November – February) and summer (July – September),” according to Seeking Alpha.
Year-to-date, investors have added $1.37 billion to GLD, the largest gold ETF. That includes second-quarter inflows of $916 million.
For more information on the gold market, visit our gold category.
Tom Lydon’s clients own shares of GLD.