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Gold Price Prediction – Gold Seasonally Rallies In January; 2020 was a Robust Year

By:
David Becker

Gold has rallied 100% of the time in January over the last 5-years

Gold Price Prediction – Gold Seasonally Rallies In January; 2020 was a Robust Year

Gold prices finished 2020 on a high note, rising slightly and testing resistance levels. For the year, Gold prices increased by nearly 23%. Throughout 2020 gold had highs and lows, including trading in tandem with riskier assets, as well as losing some of its safe-haven statuses to Bitcoin. Despite the ups and downs, the yellow metal outperforms and should continue to experience upward momentum in 2021. Gold generally outperforms in January. Over the past 5-years, gold prices have rallied 100% of the time for an average gain of 5%. Over the past 10-years, gold prices are higher 70% of the time for average growth of 3.2%. There is an impetus that can drive gold in January. On January 5, the special election in George will take place. If 2-democrats win, the Senate will be held by the democrats, and its hard to believe that this is already priced into the markets.

Technical Analysis

Gold prices moved higher on Thursday, and prices are poised to test resistance near a downward sloping trend line that comes in near 1,902. Support on the yellow metal is seen near the 10-day moving average at 1,879. The 10-day moving average has recently crossed above the 50-day moving average which means that a short-term up trend is now in place. Short-term momentum is positive as the fast stochastic continues  to move higher. Prices are nearly overbought as the fast stochastic is printing a reading of 79.97, just below the overbought trigger level of 80. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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