A Quick Look at the Technicals of the 4 Precious Metals

Gold’s price dipped 0.13% to $1,312.8 per ounce on May 9. The fall in gold was extended for a number of reasons.

Meera Shawn - Author

May 10 2018, Published 8:56 a.m. ET

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Low RSI levels

Gold’s price dipped 0.13% to $1,312.8 per ounce on May 9. The fall in gold was extended for a number of reasons, including a decrease in overall volatility and rising US Treasury rates. We’ll discuss these factors at length in the next few articles.

Silver, platinum, and palladium diverged from gold and scaled on May 9, rising 0.43%, 0.50%, and 0.75%, respectively. Silver was trading at $16.5, its RSI (relative strength index) level was 30.2, and its call-implied volatility was 16.6%. Platinum was trading at $911.6, its RSI level was 39.9, and its implied volatility was 18.7%. Palladium was trading at $972.8, its RSI level was 32.8, and its implied volatility was 25%.

The RSI level for gold has dipped to 28.2, which indicates the potential for an upward revision in its price. Remember, an RSI level of lower than 30 suggests a potential upward movement, while a level of higher than 70 indicates a possible downswing.

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Impact of funds and miners

The most crucial factor that continues to play a significant role in the determination of price movements for precious metals is the US dollar. The US Dollar Index had risen ~0.57% over the last five trading days. A strengthening dollar creates a weaker position for precious metals, as they are all dollar-denominated assets, and their demand suffers from a scaling dollar.

Among the mining shares that joined gold in its fall on May 9 were Harmony Gold (HMY), Eldorado Gold (EGO), Hecla Mining (HL), and Kinross Gold (KGC). These stocks fell 3%, 1%, 0.5%, and 10.9%, respectively.

The iShares Gold Trust ETF (IAU) and the iShares Silver Trust ETF (SLV) diverged on May 9. IAU fell 0.16%, while SLV rose 0.13%.


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