Christmas/Santa Claus Rally In Gold (Gold Seasonality)

Last Updated on April 18, 2023

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:

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:

• The Martin Luther King Jr. Day holiday effect in trading (Backtest and strategy)
• George Washington Day/President’s Day holiday effect in trading (Backtest and strategy)
• The Easter Holiday effect in trading (Holy Thursday – best day of the year for stocks? Backtests and strategies)
• The Memorial Day Holiday Effect In Trading (Backtest And Strategy)
• The 4th of July Holiday Effect In Trading (Independence Day Effect – Backtest and strategy)
• The Labor Day Holiday Effect In Trading (Backtest And Strategy)
• The Thanksgiving and Black Friday effect in the stock market (Backtests and strategies)
• The End Of The Year Rally In Stocks (Santa Claus Rally/Effect Strategy)

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

List of trading strategies

Since we started the blog in 2012 we have written over 800 articles. Plenty of those articles contain specific trading strategies that have trading rules and performance metrics.

We have compiled many of those into a package of code that you can order. We have thus far over 160 different strategies in our compilation. The strategies are taken from our list of best trading systems. The strategies are an excellent resource to help you get some trading ideas.

The strategies also come with logic in plain English (plain English is for Python traders and backtesting).

For a list of the strategies we have made please click on the green banner:

These strategies must not be misunderstood for the premium strategies that we charge a fee for:

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!