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Where Are Gold Charts Pointing?

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Updated

Gold slides

Gold has been falling since touching its one-and-a-half month peak of $1,338.3 per ounce last week after Republican representative Donald Trump was elected president of the United States.

Gold futures for December 2016 expiration have been falling for the past six trading days. Futures closed at $1,221.7 per ounce on November 14, 2016. Gold’s call-implied volatility has risen due to uncertainties gripping the world markets.

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The historical call-implied volatility for gold futures was close to 20.3% on November 14. The chart above depicts that the bears of the market are likely in control of gold. The $1,210 mark seems to be a strong support level for the precious metal. If this support breaks, more pessimism could be around the corner, as the Federal Reserve seems nearly ready to tighten its belt. Fears of an interest rate rise are gripping precious metals.

October 2016 was comparatively bleak for precious metals, and we saw gold trading almost sideways during the month. Gold touched its lowest level of $1,211 in about six months on November 14.

Miners and funds that fell

The falls in gold and silver over the past few days were replicated by gold- and silver-based mining funds such as the Sprott Gold Miners ETF (SGDM) and the Global X Silver Miners ETF (SIL). These two funds fell 10.8% and 12.9%, respectively, on a trailing-five-day basis.

Mining shares that also tumbled sharply included Pan American Silver (PAAS), Yamana Gold (AUY), Randgold Resources (GOLD), and Franco-Nevada (FNV) at falls of 8.9%, 11.3%, 12%, and 14%, respectively, on a trailing-five-day basis.

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