Some people might look forward to singing "Silver Bells" at this time of year, but did you know that gold prices also have a song to sing? Believe it or not, there is a tendency for gold prices to gain strength approaching the holiday season. Therefore, it is a topic worth considering as gold’s previous seasonality is meaningful for speculators and investors. It just might offer some welcome insight, brighten the holiday spirit and help those interested in fine tuning the timing of precious metal trades.[center][img]http://ng5.upanh.com/b3.s25.d1/45b038aca6377da578884f946eafbc78_38935365.121411gc.jpg[/img][i]Past performance is not indicative of future results.***chart courtesy of Gecko Software[/i][/center]Let's get one important thing out in the open first. Seasonal and weather trends might already be priced into the market, and any past movements in price are not a promise of future results, so keep that in mind.Seasonality is not something that is often associated with the price of gold. Typically seasonality or weather related patterns are often thought of as something that applies to crops, or even certain stocks like Toys R Us. It is in cases where a commodity is planted, grown and later harvested during certain times of the year that triggers a thought towards seasonal patterns. Seasonality is even logical with some stocks. Who would think that there is a similar tendency for the yellow metal since gold is extracted or mined, in all types of weather and at all times of the year?The supply side is only one side of the story. Demand also plays an important role. Demand is the sometimes overlooked part of the equation, as there may be regular seasonal forces at work. Think of how demand for toys picks up as Christmas approaches or the seasonality of certain clothing like bathing suits. This can also be the case with gold, where purchases and interest are driven by a seasonality of demand.Holiday bonuses may be a simple factor, but it’s likely more than that. Investors and speculators increase their holdings when they see opportunities for demand, and prices, to increase. Those times may be when the political or economic climate is perceived as changing. While those events can occur at anytime during the calendar year, gold still shows a historical tendency to rise during the holiday season. It is simply because there tends to be more demand for gold at this time of year.One global factor that helps drive this demand and signal the start of gold’s seasonal price rise comes from post-harvest Asian buying. India is a particularly good example of this. India is famous for its harvest festival season and India has long been the world’s largest gold consumer, although China is likely to overtake that role sometime in the near future. The core of Indian festivities following the harvest is their famous wedding season.Wedding traditions in India are elaborate and fascinating. They help drive what is usually the world’s biggest gold-demand period of the entire year. Marriages in India are so very important that even today most are arranged by families. For many, the timing of these weddings is critical. There is an increase in weddings during festival season. It is thought to enhance a marriage’s success, longevity, happiness, and good luck. Families of Indian brides pay handsomely to outfit them with extensive gold dowries, much of which is in the form of gold jewelry. No expense is spared in buying these gold dowries, which is why Indian gold demand soars in autumn.It is not unusual for between a third and a half of India’s entire annual gold demand to occur during this time. Although it tapers off in late November to early December, gold’s strong seasonal period continues into the Western holiday season. This is when the overwhelming portion of discretionary spending takes place. There is a pronounced surge in gold jewelry demand as holiday dollars flow into gifts for wives, girlfriends, daughters, and mothers. In fact most jewelers do well over half of their entire year’s sales between Thanksgiving and Christmas.After the first of the year, the market experiences a similar impact from China. The Chinese New Year typically falls between late January and mid-February on the Western calendar. The Chinese have a deep cultural affinity for gold and gold investments.All of these events add up to very good motivators for seasonal rallies in gold. The bottom line is that there is a demand-driven seasonal in gold that comes from a variety of cultural factors around the globe. It is a cycle that precious metal traders should be aware of. Though seasonal are only a secondary driver, they are reliable and worthy of attention.Of course, it is also important to recognize that any seasonal tendency is merely a proclivity, and as such may be superseded, or over-ridden by other events. While it is a factor, it is always important to pay attention to other factors such news events just as one might with other assets.This year such a situation developed as gold prices approached the time of year when seasonal demand was overridden by an overbought market. While gold’s seasonal tendency is for prices to begin ascending in the fall, instead there were some violent downward moves. It is felt that an overbought situation caused a major correction to occur. This holds true for any market which is overbought or oversold, just as any seasonal tendency can be negated or ignored altogether by a news event.Think of it this way, prevailing winds will always influence a golf ball’s flight even if it is struck true and on course. Serious golfers know this and adjust. Serious traders should too. Even though it makes sense to be aware of gold’s seasonal tendency, remember the prevailing wind of other market influences. When gold’s primary drivers are positioned to support a major move, seasonal winds can assist, or serve to enhance the price move. This may help it make a larger and faster move.[b]Summary[/b]Right now we are heading into gold’s strongest time of the year seasonally. In the last decade gold prices have on average moved about 10% higher between late October and late February. I am not suggesting that this is precisely what will be experienced again this year, especially as so much news is influencing markets in general, but it is a tendency that gold prices have shown previously. This kind of seasonal demand, coupled with serious economic issues on a global scale, could make it hard for anyone to call a top in gold.[b][i][u]Disclaimer:[/u][/i][/b] The prices of precious metals and physical commodities are unpredictable and volatile. There is a substantial degree of a risk of loss in all trading. Past performance is not indicative of future results.