Christmas/Santa Claus Rally In Gold (Gold Seasonality)

Last Updated on December 19, 2022

Christmas Day is one of the federal holidays in the US. It’s a well-known “fact” that there is normally a “Santa Claus rally in stocks, but do we see the same tendencies in the gold price? Is there a Christmas/Santa Claus rally in gold? Is there an end-of-year rally? Let’s find out:

Since 2000 gold has performed really well over the Christmas holiday season. Thus, we can argue there is a Christmas/Santa Claus rally in gold.

This article is a typical example of one of the backtests we cover in our weekly strategy report. This is an inexpensive product and you can get 50 reports per year in your mailbox covering seasonal tendencies, anomalies, trading ideas, and other backtests.

Let’s go on to see how gold performs during the last days of the year:

The Christmas holiday

It was not until 1840 that celebrating Christmas became widespread around the world. Even later, in 1870, December 25 was declared a holiday in the US. Since then, Christmas Day has always been a federal holiday in the US. Also, the 24th of December is now a day when most markets close earlier.

Santa Claus rally in gold?

Let’s go on to backtest to find out if there is a Santa Claus rally in stocks. We make the following trading rules:

  • We buy gold at the close of the OPEX day in December,
  • And we sell at the close of the first trading day of the new year.

If we backtest back to 1980 we get the following equity curve:

Gold seasonality (santa claus rally)

As you can see, the Santa Claus rally has been strong in the 2000s, but not before that. The average gain per trade is still 1.14% (a whopping 2.23% from the year 2000, though). The win rate has been 65% since 1980, but 86% since 2000 (read more about win rate in win rate trading).

Holiday effects and seasonal anomalies in the markets

We believe seasonality trading is a rational approach and we have previously covered all the US stock market holiday seasonality effects in trading. To sum up, we have the following other holiday effects in the US markets:

Click here for a full list of our seasonal trading strategies.

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The Santa Claus rally in gold (end of year rally/effect) – conclusions

Most holiday periods show positive performance in the stock market, but the Santa Claus rally in gold has lately been on a roll. The end-of-year effect/Santa Claus rally in gold is no myth!

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