This believe is based, among other, on the assumption jewelery demand increases at the end of the year.
Indeed, if you take a look at the average monthly returns over the last 41 years (1969-2010), price of gold was increasing in September, November and December:
Fig. Average monthly changes
Both Q3 and Q4 were on average positive for gold, and stronger then Q1 and Q2:
Fig. Average daily changes in particular quarters
However if you take a closer look at the distribution of monthly changes, the pictures gets less clearer. September was historically a very volatile month, and while average returns for 3 out of 4 months in Q4 were usually positive, the probability of loss was still substantial:
Fig. Distribution of monthly changes
The randomness of changes is even more visible, when you combine two consecutive months - now average bi-monthly returns are very close to zero.
Fig. Distribution of bi-monthly changes
And still more when you analyze daily data - here you can see that daily changes oscillate around zero each month, without a clear tendency:
Fig. Distribution of daily changes in particular months
You can also take a closer look at the distribution of changes in potentially the most beneficial months, such as September and November - in the former positive average return was generated by infrequent high results, and in the later the distribution is rather symmetrical with some outliers on the negative side:
Fig. Histogram of changes in September
Fig. Histogram of changes in November
Hence, based on the available historic data I cannot agree that the probability of gain from investing in gold now and holding it till the end of the year is significantly higher then making a loss on such an investment.I just can't see a visible cyclical / seasonal pattern in gold prices. But maybe somebody else can and would correct me?
To see daily chart of gold futures prices go to: http://www.wolframalpha.com/input/?i=gold&a=*C.gold-_*Commodity-
You can also find my bookmarks for articles about gold at: http://delicious.com/reakkt/gold
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