Gold’s Sentiment Status at a Seasonal Turning Point (on average)

Compliments of Sentimentrader, here are some views into the current sentiment standing in the gold market.

Let’s get the supposed bad one out of the way first. Public optimism is too high, despite the macro market relief rally. But then again the last bull market lasted a decade, much of it with gold’s public optimism reading pinned above the supposed danger line. Bull markets create enthusiasm. A bullish public is a condition for correction, but not nearly a good timer.

gold sentiment

Here is how Sentimentrader (ST) amalgamates the gold risk profile. Nothing alarming here.

gold risk

Commercial gold hedgers are fairly well leaning against the metal. But regardless of what the ghost story tellers tell you, this too is a normal function of a bull market. Hedgers (including industry participants) hedge. Always have, always will. It’s a condition for a correction, not a directive for one.

gold hedgers

ST has a gold volatility index (VIX), FYI. I don’t see a ton of value in this because just one look at how long the VIX existed well below supposed danger territory and how long it rallied in conjunction with that tells me it’s not a very viable indicator beyond ‘FYI’. FYI, gold’s VIX is fine right now if you’re a gold bull. It’s a lot like how the SPX VIX can tantalize bears for weeks and months on end.

gold vix

Finally, the seasonal has been flattened in comparison to 2020’s volatility, but gold did take a dump on schedule in March and has been rallying since. It tends to make another low in June or July and then starts to crank into October on average.

gold seasonal pattern

So there you have a snapshot into the sentiment workings behind the gold market here in July, which is a bottoming month coming as gold has been in a gentle downward consolidation since April. Seasonal averages and sentiment are just tools to be combined with macro fundamentals and TA to produce a picture of the probabilities. This portion of the picture is not standing in the way should the gold market continue its recent break from consolidation.

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