Gold Largest Monthly Decline in 4 Years, DJIA Strongest Rally Since 1987

In November, spot gold posted largest monthly decline in more than 4 years, while Dow Jones Industrial Average recorded biggest monthly rally since 1987.

Trading floor 1

In November, spot gold dropped 5.4%, the biggest monthly decline since May 2016. At the same time, the Dow Jones Industrial Average Index jumped 11.8%, the largest monthly advance since January 1987. The S&P 500 Index rallied 10.8%, matching the previous largest monthly increase in October 2011. It appears that the relatively positive correlation between gold and US equities, seemingly since the launch of expansive fiscal and monetary policies in major countries to compact the coronavirus, begins to fade. 

In fact, Federal Reserve Chair Jerome Powell said on Monday that "recent news on the vaccine front is very positive for the medium term", though he did not provide guidance on how the Fed would respond. The Fed will hold its FOMC meeting on December 15-16. Nevertheless, according to gold ETF holdings data, investors’ demand for gold appears to be easing amid Covid-19 vaccine breakthrough. 

Spot Gold: Downside Pressure Persists


Sources: GAIN Capital, TradingView


On a daily chart, spot gold remains under pressure after breaking below a long term bullish channel. Currently, it has dropped further below both the 20-day and 50-day moving averages, while the relative strength index has yet shown bullish divergence. The level at $1,850 may be considered as the nearest resistance, while the 1st and 2nd support are expected to be located at $1,735 and $1,680 respectively.


More from Gold

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.