Gold has a seasonal tendency to peak in late January after the holiday season, as jewelry demand starts to decline. Price increases can last into the first part of February, as inventories are being replenished by dealers preparing for retail sales for Valentine’s Day gifts.

Gold tends to post seasonal bottoms in late June or early July, as demand increases when jewelers again stock up ahead of a the seasonal wedding event in India and also, when investors return from summer vacations. Gold prices are also subject to spikes in demand from the investment community, as a hedge or protection from concerns over inflation or times of economic instability or uncertainties. It is valued in terms of the U.S. dollar, so periods of dollar weakness helps support gold’s value.

In the following chart, various 1-year seasonal patterns have been plotted using continuously-linked front-month gold future prices. Gold’s 2016 year-to-date performance is included for comparison. Gold’s 11-, 21- & 41-year seasonal patterns are all relatively similar throughout the year and fairly closely follow the pattern of an early-year peak, followed by sideways to lower trading toward a June/July low and then a rally to close out the year. However, since trading at its all-time high in August 2011, gold has been in decline and its 5-year seasonal pattern reflects this with an average 5% loss by yearend for the last five years. Whether or not this typical seasonal lull transpires this year will largely depend on the Fed, what it does or does not do with interest rates and ultimately the impact on the U.S. dollar.