Can gold count on its best month of the year to start 2025 trading?

It’s a bit of a tricky one this time around with gold prices rising by over 27% already in 2024. Things have cooled off in November and December so far but that arguably owes much to the US election result, which in turn has also impacted the Fed outlook somewhat for next year. A surging dollar has helped to keep things in check, for now at least.

With gold poised to snap its December hot streak (there is still time to recover that of course), is January – typically gold’s best performing month – also under threat?

The recent seasonal pattern also suggests that January is the best month for gold over the past decade. However, that hasn’t quite been the case in the post-pandemic era. One can argue that in part, there is some frontrunning in the buying in December. But is it perhaps to do with China also struggling during this period? After all, there is always the thought of that gold rush coming through ahead of the Lunar New Year celebrations.

That being said, China itself has been a big fan of gold in the last 12 months. That in spite of what the central buying data might suggest.

Looking to next month, there are a couple of things that could set gold back to start the new year. The big one of course is market players still having the fresh memory of a more hawkish Fed from last week. That has put the dollar in a decent spot and we could see broader markets pick up from that momentum at the turn of the year.

The other is that gold has suffered a bit from a technical perspective in the past week. We saw price dip below is 100-day moving average for the first time in over a year but gold buyers did salvage that in recent sessions. The key level is seen at $2,616 currently and price is trading above that at around $2,635 today. That said, it’s tough to look into things when liquidity conditions are thin but this will definitely be a spot to watch when we resume normality next week.

If buyers can maintain the technical control, that will be a positive boost for gold to stick with the January trend.

This article was written by Justin Low at www.forexlive.com.