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Gold Rebounded on November 24, Miners Stand By

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Gold futures gained

Gold futures for the most actively traded February contracts gained 0.63% on Tuesday, November 24, 2015. The surge in prices was exacerbated by rising political tensions after Turkish F-16 fighter jets downed a Russian Su-24 fighter jet over the Syrian border that day.

Such political volatility highlights the safe-haven appeal of precious metals. Silver also followed the same route as gold as it gained 0.90% and closed at $14.20 per ounce. Gold and silver are ranked lower than the 24 other commodities listed on the S&P Goldman Sachs Commodity Index (or GSCI). The rout in these prices resulted in their reduced comparative rankings. However, platinum and palladium reacted slightly, as palladium gained just 0.08%.

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Technical indicators

Gold, platinum, and palladium have seen equal up and down days during the last five trading days. Gold’s volatility is almost 6% lower than the average ten-day volatility. The leveraged Direxion Daily Gold Miners ETF (NUGT), which tracks the performance of the mining industry, gained 10.90% on Tuesday, November 24. The Direxion Daily Junior Gold Bear ETF (JDST) retreated 7.90% as its bet against gold’s gains.

Mining companies First Majestic Silver Corp. (AG), Royal Gold Inc. (RGLD), and Kinross Gold Corp. (KGC) have lost 11.60%, 30.20%, and 17.20%, respectively, on a 30-day trailing basis. These losses were due to the sliding prices of the precious metals, and these companies are trading well below their 100-day moving average prices.

The RSI (Relative Strength Indicator) for Royal Gold Inc. is close to 30. An RSI level close to 30 indicates a likely rebound in price. First Majestic Silver Corp., Royal Gold Inc., and Kinross Gold Corp. comprise 8.30% of the VanEck Vectors Gold Miners ETF (GDX) portfolio. Investors are watching the performance of precious metals closely, as mining companies are adversely affected by declining precious metal prices.

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