Guest post by SK Options Trading.

Seasonality is observable in a wide variety of variables. In business, sales, production, inventory, man hours and the best time to discount can be at least partially predicted by seasonal effects. Gold is no different. In different months price swings occur somewhat predictably year after year. What causes this, to what magnitude does it occur and most importantly – how can we profit?

As we all know, two things affect the price of all things tangible and intangible – supply and demand.

On the supply side, Gold stays remarkably fixed. It is mined at a very consistent rate year round with factors such as weather and temperature having much less influence than other markets such as soft commodities. In addition to this, supply can only vary rather gradually from a mining standpoint, given that it takes around a decade to bring a new find into production. However, any seasonality in the gold price must be attributed to variations in supply and demand during different times of the year, since supply could also be increased by non-mining entities, such as investors selling their holdings.

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