Gold ‘s sharp August rally is starting to look a bit stretched, according to Bespoke Investment Group. Futures tied to the yellow metal have been on a hot streak, up around 8% this month alone. Last week, the yellow metal rose to its highest level since June. It also gained 7.1% for its best weekly performance since January amid weaker-than-expected payrolls and hopes for a deal to reopen the Strait of Hormuz. @GC.1 1M mountain Gold futures in the past month The precious metal’s latest rally not only lifted it above its 50-day moving average, it also entered overbought territory for the first time since March 10, Bespoke found. On Friday, gold ended the session a full standard deviation above its 50-day moving average — a first in 103 trading days, the firm found. “That is one of the lengthier streaks without an overbought reading on record,” Bespoke said in a Monday note. “Historically once it notches that overbought close, returns have generally been negative going forward.” Bespoke data shows that following previous streaks of over 100 trading days without an overbought reading, gold showed an average decline of 0.22% in the following week. The metal fell 0.34% over the next month and 0.53% over three months. On average, the largest decline was after 12 months, when gold fell 0.62%, the firm found. Only 37% of those historical episodes were positive one year later, according to Bespoke’s analysis.
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Monday, September 21
