How Gold’s Volatility Jumped in Early May
Gold had touched a three-week low on Monday, May 1, but it now appears to be rebounding. On Tuesday, May 2, gold scaled 0.12% and ended the day at $1,257 per ounce. Gold has the support of a 200-day moving average of $1,253.
The call implied volatility in gold increased on Monday to 11.5%, as prices rebounded on Tuesday the volatility dropped to almost 10.9%. Call implied volatility measures the change in the price of an asset with respect to variations in the call option.
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The overall volatility of the market also has a substantial impact on gold. You can see the CBOE Volatility Index (VIX) (VXZ) (VXY) versus gold mapped on the graph.
It’s expected that gold and volatility may follow the same track many times. As unrest in markets jump, the demand for haven assets like gold and silver increases.
The other three precious metals continued their slump from Monday and fell further on Tuesday, May 2. Silver dropped 0.07% and closed at $16.8 per ounce. Platinum retreated 0.67% to end the day at $925.6, while palladium fell 0.1% and closed at $813.6 an ounce.
Fund and mining company performance
Meanwhile, the most famous gold and silver funds, the SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV), have been following their respective metals and have seen declines of 0.93% and 2.3%, respectively.
The mining shares that rebounded on Tuesday, May 2, include Newmont Mining (NEM), New Gold (NGD), First Majestic Silver (AG), and Auric Gold (AUQ), which rose 1%, 0.73%, 0.13%, and 3.6%, respectively.
Continue to the next part of this series (below) for a look at how the dollar has been playing on gold this week.