How Global Market Sentiment Is Affecting Gold

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How Global Market Sentiment Is Affecting Gold PART 1 OF 4

How Are Miners’ Implied Volatilities Trending?

Mining stocks

Investors seem to be constantly speculating about the impact of the Fed’s upcoming rate hike decision on precious metals. Rising interest rates often negatively affect precious metals and mining stocks.

While there are many important indicators that investors can keep track of during times of speculation, we’ll look at 14-day RSI (relative strength index) scores and implied volatility.

How Are Miners&#8217; Implied Volatilities Trending?

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Over the past one week, precious metals have regained losses. Funds like the SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV) have also risen. These two funds rose 0.95% and 2.9%, respectively, on a trailing-five-day basis. However, mining stocks have seen mixed performances despite this rebound.

Implied volatility

Call implied volatility considers changes in an asset’s price given variations in the price of its call option. In times of market turbulence, volatility usually rises.

On May 29, 2017, the implied volatilities of Alamos Gold (AGI), First Majestic Silver (AG), Royal Gold (RGLD), and Goldcorp (GG) stood at 53.6%, 52.6%, 25.9%, and 29.7%, respectively. Mining company volatility is often higher than precious metal volatility.

RSI scores

A 14-day RSI score above 70 tells us that a stock price might fall, but a score below 30 indicates that a stock price could increase. The four previously mentioned miners’ scores have risen due to their higher stock prices. RSI scores often follow the rises and falls in companies’ stocks.

Alamos, First Majestic, Royal Gold, and Goldcorp have RSI scores of 53.4, 66.4, 83.9, and 50.2, respectively.

For ongoing updates on this industry, keep checking in with Market Realist’s Metals and Mining page.


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