Market physics would eventually weigh down on gold as the precious metal has been unexpectedly rallying for much of the year. Despite prices heading lower, the start of summer could bring seasonal gold buying if history repeats itself.
Gold prices year-to-date are up about 12%, essentially mirroring the rally in the S&P 500 though the latter may have more room to run if interest rate cuts allow for an equities surge. The path to more gains may not be as certain when it comes to the precious metals, but the dog days of summer could allow for investors to buy in, especially if they’re looking to diversify their portfolios.
“With traders’ attention normally diverted to vacations and summer fun, interest in and demand for precious metals usually wane,” Investing.com reported. “Without outsized investment demand, gold tends to drift sideways to lower dragging silver and miners’ stocks with it. Long feared as the summer doldrums, they can offer good buying opportunities.”
There are a couple of tailwinds that could allow for a summer rally. China demand and continued buying from central banks could keep gold prices afloat, but if investors want to buy into the dip, June is an opportune time given its historical price pattern.
“If those trends continue, gold could enjoy a strong summer 2024,” Investing.com noted further. “On average during these 20 modern bull years, gold’s summer-doldrums low is actually carved in mid-June. June is the worst of the summer doldrums, averaging 0.3% losses. But buying picks up again in July and August, which have averaged nice 1.2% and 1.6% gains.”
2 Funds to Consider While Gold Dips
A dip in gold opens opportunities for exposure into gold funds as opposed to the buying the precious metal itself. Funds offer logistical benefits for exposure versus holding physical gold.
However, if investors prefer the tangible feel of physical gold, they can retain that option with the Sprott Physical Gold Trust (PHYS ). As mentioned, the fund offers exposure to the metal without the inconvenience of having to store physical gold, but have the option of converting their shares of the fund into physical bullion if they so please.
Additionally, an alternate play on the metal’s prices via ancillary gold services like mining offers opportunities in the Sprott Gold Miners ETF (SGDM ). The ETF seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index. This index tracks the performance of large gold companies found on Canadian and major U.S. exchanges.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
