Reduced precious metals volatility

The volatility in gold decreased as gold slipped for yet another day on Wednesday, July 27, 2016. Although gold futures for August expiration increased 0.64% and closed at $1,334.50 per ounce, the call implied volatility. Volatility measures changes in the price of gold’s call option with respect to changes in price. It was at 15.8% on Wednesday. That’s much lower than 20% during the days of the Brexit vote. It was also comparatively less than the 16% at the beginning of the week.

Silver, platinum, and palladium also followed the changes in gold and rose. They increased 3%, 4.3%, and 2.9%, respectively, and closed at $20, $1,128.20, and $1,703.90 per ounce, respectively. Platinum was the winning precious metal on Wednesday. It increased substantially more than its three counterparts.

Front Month Silver Futures 3-Month Price Evolution 2016-07-29

Moving averages

Above is a three-month graph for silver. It shows a considerable surge due to the Brexit vote and the Market unrest that followed. However, haven bids for silver seem to be declining. The recent Fed meeting was able to pull back the price of silver.

Despite silver’s price decline, it’s still trading at a premium of 16.2% to its 100-day moving average. Gold is at a 4.4% premium to its 100-day moving average.

RSI indicators

The RSI level for gold, silver, platinum, and palladium are 55.5, 66.6, 68.6, and 85.7, respectively. An RSI level above 70 indicates that a stock has been overbought and could fall. An RSI below 30 indicates that a stock has been oversold and could rise.

Gold- and silver-based funds such as the iShares Gold Trust (IAU) and the iShares Silver Trust (SLV) increased 1.7% and 3.8%, respectively, on Wednesday. Funds that follow platinum and palladium such as the ETFS Physical Platinum (PPLT) and the Physical Palladium Shares (PALL) rose 4.4% and 1.8%, respectively, on the same day.