The XAU in January
December is now behind us and it turned out to be a positive one for the XAU gold/silver stock index as per the XAU's seasonal pattern for December. This December strength in the gold stocks was not surprising based on facts uncovered in the seasonal/historical overview discussed in last month's article entitled "The XAU in December" (as part of our ongoing XAU seasonal pattern review). For the month of December 2005, the XAU started off at its 15-day moving average at around the 118 level and rallied to just below the 130 level before closing the year at 128 for a solid performance year-to-date.
Now that we're about to enter a new month, what can we expect for the XAU's performance in January based on past history? What follows is an overview of the XAU's seasonal tendencies for the month of January.
January 1995 was a negative month for the XAU, with the index opening the month at 105 and closing at 97.38. In this month back in '95, the XAU ended a 4-month decline that began in October '94. The XAU essentially traced out a triple bottom in the late part of 1994 and through February of '95, so while January 1995 was a down month for the XAU, it was for good effect later in the year.
The XAU had a strongly positive month in January 1996, which saw the XAU pivot off its 30/60/90-day moving averages at the start of the month, starting the month at 126.48 and rallying up to 141 at month's end to make a new 52-week high in January '96.
January 1997 saw the index decline from the 114 level at the start of the month to a low of 107.27 before finishing at the 110.20 level. The XAU had undergone a multi-month downtrend in 1996 before putting in a temporary bottom in January 1997.
January 1998 witnessed a similar performance as the previous year's January had, with the XAU coming into '98 from a downtrend and falling from 75 down to a low of almost 60 early in the month before reversing higher up to 80. This late-month rally enabled the XAU to retrace most of its losses from earlier in the month, although it still ended the first month of 1998 with a fractional loss.
The XAU had yet another similar experience the following January. January 1999 began with the XAU at 65.52 and finished with the index at 63.26 for a minor loss. From a chart standpoint, the month was largely on a downward slope with the XAU peaking at a high of 75 early in the month and then sliding for the remainder of the month to retrace nearly all of its gains.
The first month of the new millennium was a downer for the XAU. The index started January 2000 at 67.53 and declined in the later half of the month down to slightly below 60 before closing the month at a fraction below 60.
January 2001 was also a downer for the XAU, with the index starting the month at 51.75 and finishing at 48.86.
The following year saw a departure from the January weakness theme that had become common for the XAU. January 2002 opened with the XAU at 54.80 and closed with the index at 61.33 for a respectable gain. (The year 2002 was the year in which the gold stocks famously outperformed the S&P by a wide margin).
January 2003 witnessed a return to the January weakness theme, with the XAU starting the month at 77.82 and finishing at 77 for a slight loss in what was mostly a sideways month of trading.
January 2004 saw a continuation of the weakness theme as the XAU opened at 109.48 and finished up the month at 95.58 for a solid loss, breaking below its 90-day moving average in the process and kicking off a 7-month correction.
In the most recent January, the XAU opened the first month of 2005 at a value of 95.65 and closed the month at 91.40 for yet another January loss.
Of the past 11 Januarys, the XAU has posted losses in nine of them. This makes January historically and seasonally among the weaker months of the year for the XAU gold/silver index.