Gold: A Return To Positive Seasonal Trends?

After rising for six weeks, gold and silver prices fell for the third straight week as bearish forces strengthened, the most important being an improving U.S. economy that has led many investors to think the Federal Reserve will raise interest rates sooner rather than later.

Though the disappointing labor report on Friday cast new doubt on the pace of the recovery and led to a gold market rally, data released earlier in the week on economic growth and wage increases pointed to a less accommodative central bank and a stronger dollar later this year and early in 2015.

Safe haven demand continues to be one of the very few positive near-term catalysts for precious metals and, given recent developments in Ukraine and the Middle East, this could drive prices sharply higher at any time. B

ut the lack of Asian buyers over the summer and the ongoing weakness in broad commodity markets will make it difficult for metal prices to rise in the month ahead and positive seasonal factors may not help either.

The gold price fell below the key $1,300 an ounce level on Tuesday and added to those losses after better-than-expected GDP growth was reported on Wednesday and rising wages were reported on Thursday.

The metal ended July with a loss of over two percent and, as shown below, has recently made a mockery of the regular seasonal patterns by moving opposite the norm over each of the last four months…

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