Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

Ahead of the US election, gold prices continue to hit historic highs. The price of gold has risen by 5% this month, and by 34% since the beginning of the year, second only to the 42.3% increase in silver prices. The sharp rise has raised concerns in the market about the possibility of prices reaching their peak.

Ole Hansen, the head of commodities strategy at Sheng Bao Bank, believes that gold and silver are rebounding strongly due to safe-haven demand, geopolitical tensions, de-dollarization driving major central banks to buy gold, and increased uncertainty around the US presidential election. In addition, rate cuts by the Fed and other central banks are reducing the cost of holding interest-free assets such as gold and silver.

It is also worth noting that the price of gold did not react to the easing of the situation in the Middle East. In contrast, crude oil prices experienced their largest single-day decline in two years on Monday. This may indicate that gold is increasingly seen as a hedge against a potential 'red sweep' in the US election on November 5th, where one party (this time the Republicans) will control both the White House and Congress. With the rising possibility of Trump's victory, gold and US Treasury yields are rising, as people fear excessive government spending, while import tariffs and geopolitical risks exacerbate inflation concerns.

Apart from the US elections, the market remains steadfast in its belief that the Fed will announce a 25 basis point rate cut at the meeting on November 7th, which will further support demand for gold ETFs. After two years of net sales, the total holdings of gold ETFs hit a low point in May, and then Western ETF investors finally returned as buyers. Since the Fed began raising rates aggressively in 2022, Western ETF investors have been net sellers of gold ETFs.

Hansen warns that after a significant increase in gold prices, there is still a possibility of a deep correction - if the Republicans do not control both the White House and Congress at the same time. However, as long as the reasons for holding gold have not disappeared, there is still the prospect of further price increases. Considering this, Hansen believes there is a risk of a correction of over $100 for gold prices next week; however, as shown in the chart below, the correction will find support at $2685, and breaking below $2600 may trigger larger volatility.

Hansen also reviewed the largest trading volumes of gold and silver options last week, undoubtedly, call options dominated. It is noteworthy that some traders have increased their preference for silver, a metal whose trading price is relatively cheaper than gold, around two-thirds lower than the record high of $50 in 2011. According to the table, 8 out of the top ten silver call options with the largest trading volumes are call options, with traders particularly favoring call options with strike prices of $35 and $40, both expiring on November 25.

In terms of gold options, some traders have started buying put options. Although the largest trading volume is for call options with a strike price of $2900 expiring on November 25, put options with strike prices of $2650 and $2600 have also attracted investors' attention.

Top ten gold and silver options with the largest trading volumes

As of Wednesday's close, comex gold futures rose 0.65%, to $2799.1 per ounce, continuing to hit a historical new high. Comex silver futures fell 1.47%, to $33.935 per ounce.

Editor / jayden