As September begins, gold’s remarkable performance shows signs of strain, with its upward momentum starting to falter. Despite maintaining support above $2,500 per ounce, the precious metal is contending with technical selling pressure and historically weak performance during this month.
Currently, December gold futures are trading at $2,528.40 per ounce, reflecting a modest gain of 0.21% for the day. Nevertheless, analysts caution that gold might encounter difficulties, as September has historically been one of the least favorable months for the metal.
Nicky Shiels, Head of Research and Metals Strategy at MKS PAMP, highlighted that gold has traditionally declined by 2.4% in September since 2009. Bloomberg analysts add that since 2017, gold has faced a 3.2% drop during what is often referred to as the “September Curse.”
Silver, too, struggles in September. Over the past 15 years, the metal has averaged a 3.7% decline in this month. Analysts point out that while September is typically weak for equity markets, it often brings unexpected strength to the U.S. dollar.
“September is known for increased volatility and reduced U.S. equity exposure,” said Shiels. “Given gold’s impressive 20% rally this year and high equity market valuations, investor caution is to be expected as summer ends.”
Gold’s current challenges come as the U.S. dollar, which hit a one-year low last month and entered oversold conditions, shows signs of a slight rebound. Despite recent weak performances in September, some analysts argue that the long-term perspective diminishes the impact of seasonal trends. Over the past 30 years, September has, in fact, been a positive month for gold.
Analysts maintain that gold’s broader uptrend is likely to persist, even with short-term volatility. Continued central bank purchases are expected to provide strong support for the metal. Additionally, investor interest is anticipated to increase as the Federal Reserve is expected to commence its easing cycle later this month.
Looking beyond September’s seasonal weakness, the final months of the year have historically been strong for gold. Phillip Streible, Chief Market Strategist at Blue Line Futures, notes, “Futures have risen in 13 out of the past 15 years, and typically, after a brief pause in early November, they tend to climb from Thanksgiving through the New Year.”
