Historical data reveals that Gold tends to rally during the US Thanksgiving celebration, which is held on the 4th Thursday of November each year.
Although a rally often takes place during the week in which the celebration is observed, in order to check the validity of this trading idea, we would like to remind you of what happened over the past 12 years.
From 2002 to 2012, a moderate or significant rally occurred each Thanksgiving, which resulted in 100% accuracy for those 10 years. However, the Thanksgiving effect did not take place in 2013 or 2014.
So, will we witness the Thanksgiving effect in 2015?
Since it skipped the last 2 years, there is certainly some validity to thinking a Thanksgiving rally is overdue, but the effect needs to manifest itself before the end of this week to qualify as a Thanksgiving rally in the true sense.
The dominant bias on Gold (XAUUSD) is still bearish as price has been resolutely moving south, but a shallow bullish divergence has appeared following a recent oversold condition in the market. Normally, that would signal another short-selling opportunity, but an instance of the Thanksgiving effect could aid the bulls this time.
Since Silver (XAGUSD) tends to be positively correlated with Gold, it is also affected by the Thanksgiving effect. Of course, if the effect does not affect Gold then it will not affect Silver either. The dominant bias on Silver is also currently bearish and the price formation is quite similar to Gold at this time.
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