Even though gold closed below $1,400 an ounce yesterday after crossing that barrier earlier in the week, things are looking up. September is a historically strong month for gold with India’s wedding and festival season kicking into full gear. Additionally, all of the uncertainty in Syria, the mounting issues with the U.S. debt ceiling, and the Federal Reserve hinting at a reduction in its bond-buying program are also very positive signs for the price of gold.
Yesterday afternoon, Secretary of State John Kerry made a broad case for U.S. military action against Syria. The decline in gold prices briefly halted during this speech, but quickly fell back to pre-speech levels by the end of the televised address. Even though the metal continued to drop, the spike it saw during the speech bodes well for future gains, as it looks like an attack is imminent.
According to HSBC’s chief precious metals analyst James Steel, “Geopolitical rallies tend not to buoy the market unless there’s further deterioration. In this case, it would be military action.”
The Tuesday after the upcoming Labor Day weekend marks the start of India’s wedding and festival season. This is a big reason to be bullish on gold. U.S. Global Investors chief Frank Holmes told Fox Business, “There is a seasonal pattern, which I like to identify as the ‘Love Trade,’ where 50%, almost 55% of all gold demand is for love, and it’s predominantly coming out of China and India, Southeast Asia, the Middle East, and Turkey. And we’re right in that mode, and the bottom takes place in June, July, and we get a rally all the way to Chinese New Year.”
According to Market Watch, gold and silver have added support from uncertainty surrounding the U.S. debt ceiling, stock markets, and currency moves. September is also a historically down month for the stock market and this will not be helped by all of the uncertainty over the Fed bond-buying program and the crisis in the Middle East.
The word of the day is uncertainty, and when the seas get rough, physical gold can be a safe port [Read: 5 Good Reasons To Buy Physical Gold & Silver]. Many experts have already announced that the bottom was hit and it is only a matter of time before gold prices explode. Considering September is gold’s best month historically, in addition to the mounting global economic crisis, investors will be more motivated than ever to seek out the stability of physical gold.