The World Gold Council (WGC) has reminded investors that January is traditionally a very positive month for gold – meaning now is the time to buy before that demand translates into higher prices.
WGC global head of research, Juan Carlos Artigas says this phenomenon is gold’s own January effect; a term coined to explain the historical buoyancy of the stock market at the turn of the year. While the January effect is no longer so pronounced on Wall Street, it is still a very real supportive factor for gold prices.
“The January effect is, statistically, the strongest (compared with summer peaks)”, Artigas explains. “Since 1971, gold has had an average return of 1.79% in January – almost three times its long-term monthly average. Over the same period, gold has had positive January returns almost 60% of the time, and nearly 70% of the time since 2000.”
WGC research attributes the strong performance to a variety of factors, including seasonal demand, portfolio rebalancing to set investors up for the year ahead and a typical weakness in real yields.
“Evidence suggests that gold tends to do well in January and, given that the Fed’s monetary policy is now on hold, it is unlikely the US dollar – a common headwind – will rise significantly,” Artigas adds. With the dollar set to struggle further as soon as rate cuts are confirmed, January could be an incredibly boisterous month for the gold bulls.
As ever, you’ll need to act fast to position yourself to benefit from those above average gains, given that just a few days remain of 2023. There’s still time to buy before the Christmas break sets in and trading pauses for the holiday period. Don’t miss out. Buy gold today.
