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Did Precious Metals’ Technicals Indicate a Rise?

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Jun. 6 2016, Updated 4:23 p.m. ET

RSI level

Alongside the rise in gold, silver, platinum, and palladium also jumped substantially. Silver closed 2.1% higher than the previous day’s close at $16.4 per ounce. The RSI (relative strength indicator) for gold and silver was close to the 30 level before the sudden rise due to weak economic numbers. An RSI level of above 70 indicates that a stock has been overbought and could see a downward revision. An RSI of below 30 indicates that a stock has been oversold and could see an upward revision. The sudden rise on Friday bumped the RSI figure for gold and silver higher to 48 and 46, respectively.

Platinum added almost $21 to the previous day’s close and closed at $981.9 per ounce. Palladium also added approximately $15 and ended at $549.4 per ounce. The RSI for platinum and palladium was at 41 and 46, respectively, on Friday.

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Spread measures

Among the four precious metals, palladium is the most volatile, followed by silver, platinum, and gold. However, prices for silver, platinum, and palladium follow gold trends. The inter-relationship of these metals can also be understood by way of changes in spread measures like the gold-silver, gold-platinum, and gold-palladium spreads. These three spreads were trading at 77.8, 1.3, and 2.2, respectively, on Friday. The higher the strength of gold as compared to the other three metals, the higher the spread will be.

The fluctuations in these four metals can also be studied by the way of changes in funds like the Physical Platinum Shares (PPLT) and the Physical Palladium Shares (PALL). These two funds rose by 2.6% and 3.4%, respectively, on Friday.

The miners that rose tremendously after last week’s fall include Barrick Gold (ABX), Goldcorp (GG), and Royal Gold (RGLD).

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