by Craig Hemke, Sprott Money:
It’s that time of year again when Chinese markets close for a week in observance of their “Golden Week” holiday. The typical trading pattern for gold during this holiday week is down early and up late. Will we see things play out this way again in 2024? The week certainly seems to be starting out that way.
Impact of Golden Week on Gold Prices
First of all, what’s Golden Week? In China, it’s a celebration of the communist revolution and the country’s founding in 1949. All Chinese markets close for this holiday, including the futures exchanges in Shanghai.
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Since this happens every year, we’re able to track and record the impact on gold and silver prices. Of course, nothing happens in a vacuum and there are always outside influences that drive price changes week after week. In general, however, it has been my experience that the gold price trades lower early in the week and then higher later in the week. Why? Perhaps the absence of Chinese physical demand allows paper/digital trading to have more of an impact on price?
For example, here’s a chart from the archives. Note the similarities year-over-year:
Gold Price Trends During Golden Week 2024
Could Golden Week 2024 trade in a similar pattern? Well, certainly we’re off to a frustrating start…
However, it’s only Monday as I type this and there are certainly a number of headlines pending that could turn things around as the week progresses.
- Tuesday: U.S. manufacturing sector PMIs and JOLTS job openings.
- Wednesday: ADP jobs report.
- Thursday: U.S. service sector PMIs.
- Friday: The latest U.S. jobs report and unemployment rate.
As such, there’s plenty of reason to think that a trading low for gold and silver prices could come by mid-week, and by Friday, things might look entirely different with another new weekly high.
Gold’s Record Highs and Investment Implications
More important than all of this, though, is today’s month and quarter end. Retail day traders pay close attention to intraday and daily charts. They have an impact but don’t drive the trend. Instead, it’s the flow of hedge fund and institutional cash that drives long-term bull markets. As such, the long-term charts are very important for creating and maintaining the investment narrative.
To that end, check the latest monthly chart as September comes to an end. Not only is gold at a new all-time monthly high, it’s at a new all-time quarterly high as well. If you manage billions of dollars, this type of chart gets your attention.
