Precious Metals Talking points 071026: Solar; silver under attack on three sides
Silver in the solar industry - not getting it all its own way
Rhona O'Connell
- Precious Metals
Gold Prices to Stabilise With a Q3 Seasonality Tailwind?
By: Matt Simpson, Market Analyst
I made a case for gold prices to bounce into month-end, which clearly did not work out as well as I had hoped. But then again, gold has not completely rolled over either. With prices clinging to the 4,000 level, there is certainly the potential for two-way chop around current levels. Meanwhile, futures traders have continued to build net-long exposure, options traders are not as bearish as they were a few weeks ago, and Q3 seasonality could provide a tailwind in the weeks ahead. So perhaps the case for a gold rebound is not completely over yet, although bulls may first have to endure a move towards 3,900.
Will Gold Prices Stabilise as July Seasonality Improves?
Gold's Longest Bearish Run Since 2022?
By Friday's close, gold had produced its fourth consecutive bearish weekly candle — its longest such streak since January 2024. It is now attempting to extend that run to a fifth, which would mark its longest bearish weekly streak since July 2022 if sellers succeed.
Still, the high-to-low ranges are diminishing, and a doji formed last week around the 4,000 level. Daily trading volumes are also trending lower into current support levels, suggesting the bears may be losing momentum.
Given the strength of the broader bearish trend, bulls should remain alert for an unwelcome spike towards 3,900. But with several clues pointing to a mature bearish move, I suspect many bulls are still sitting on the sidelines, ready to pounce once their buy signal appears.
Source: COMEX, TradingView
- Gold (XAU/USD) remains firmly bearish, but shrinking ranges, lighter volumes and a doji near 4,000 hint that sellers are running out of steam.
- A final flush towards 3,900 remains possible, but the selloff looks increasingly mature, putting bulls on watch for a reversal signal.
Gold Futures (GC) Positioning | COT Report
Net-long exposure continued to edge higher among gold futures traders, primarily driven by an increase in long bets from large speculators and managed funds, while shorts have continued to capitulate in recent weeks. That said, we did see a slight increase in short positions among managed funds last week.
Risk reversals continue to show that demand for puts outweighs demand for calls on XAU/USD, although by a shrinking margin. This is not a bullish signal per se, but it does suggest that options traders are less concerned about lower gold prices than they were a few weeks ago, when risk reversals fell to their most negative levels since April.
Taken together, this suggests that appetite to short XAU/USD may be dwindling despite the solid downtrend on the daily gold chart.
Source: COMEX, LSEG
- Gold futures positioning continues to improve as long exposure builds and short sellers retreat, pointing to fading conviction among bears.
- Options markets remain skewed bearish on XAU/USD, but downside hedging demand is easing, hinting that the gold selloff may be losing momentum
Gold Seasonality Analysis
Gold's Monthly Seasonality Turns More Supportive
Looking at gold seasonality data since 2000, June has typically been the most bearish month of the year by both average and median returns, alongside a low win rate of 40% (or a loss rate of 60%). Yet average returns for gold prices are positive in each month of Q3, while median returns improve further in July and August. Moreover, the win rate rises to 56% in July and 64% in August before falling back to a coin-flip 50% in September.
Before gold bulls get carried away, July also has the lowest average monthly trading range of the year. Its 56% win rate is not exactly stellar, while average and median returns are a modest 1%.
But we can take a closer look at the daily seasonal profile for gold (XAU/USD) in July to see if bulls can time any upswing with greater accuracy.
Source: LSEG
- Gold (XAU/USD) seasonality turns more supportive in Q3, with July and August historically delivering modest gains after June's typically weak performance.
- Any July rally may be measured rather than explosive, as the month also records gold's lowest average trading range of the year.
Gold's Daily July Seasonality Signals a Shaky Start for July
As gold seasonality patterns are simply an average of past performance, we need to remember that they are not a roadmap to the future. Fundamental drivers can easily overpower a seasonal pattern, and that becomes even more likely when we drill down to the daily timeframe.
Still, the daily returns data for XAU/USD since 2000 shows that July tends to be bearish through to the 6th, with win rates below 50%. Yet from the 7th, average returns and win rates tend to improve through to the 13th. These patterns disappear in the second half of the month, where the distribution of wins, losses and returns appears more random.
But if this seasonal pattern holds true this month, gold bulls may have their work cut out this week before standing a better chance of success from the middle of next week.
Source: LSEG
- Daily seasonality for XAU/USD is weakest through 6 July, with below-average returns and win rates under 50%.
- Historical odds improve from 7–13 July, although fundamental drivers can easily override seasonal patterns and the edge fades later in the month.
- Precious Metals
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