Commodities
Diamond Rated - Best Financial Markets Analysis ArticleDuring the course of the year, it is always good to sit back and review the current markets you’re involved in. In this manner, one would look at the performance not only from a percentage gain or loss basis, but in the field of seasonality as well. In other words, if we are interested in the gold market, we want to see if it is following the typical script in price movement in relation to past years. Keeping an eye on seasonality will alert you to when the best chance for highs and lows to occur during the year.
More important of an indicator that something might be going on is when a commodity does not perform like it usually does during its yearly cycle. Movement that is uncommon can provide for opportunity in the form of rallies and/or corrections (uptrend’s and downtrends.) When we see a commodity rally when it’s seasonally weak, we can ascertain potential underlying strength that has not yet been discounted by the market. The same can be said if a commodity is weak during a time when it should be strong. Keeping an eye on this gives one a good perspective of whether the market is strong, weak, or normal.
How has gold been performing so far this year, and over the past year? Well so far this year, gold peaked in February, went lower into April, rallied in May and into the first week of June, and our largest correction year to date has brought us to the July timeframe. As you can see in the seasonal chart below, gold is following the exact script it usually does in an average year. Therefore, we can categorize gold as in a NORMAL trending fashion thus far this year.
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