Key Macroeconomic Events that Could Impact Gold
Gold and silver technicals
The gold and silver markets became relatively volatile as 2016 began. Although the year has been favorable for precious metals, silver has outperformed the other three metals.
Gold and silver gained a whopping 17.1% and 17.3%, respectively, on a year-to-date basis. This is mostly due to the increased haven bids resulting from global economic unrest. Gold closed at $1,251.50 per ounce and silver closed at $16.40 per ounce on Monday, May 23, 2016.
The RSI (relative strength indicator) reading for silver is 44, and the RSI for gold is 47. A level above 70 indicates that the asset may be overbought and may see a downward revision.
Similarly, a level below 30 indicates an oversold scenario and a possible upward revision. The RSI for silver has fallen from the 70 level as the price took a drop after steep gains.
The gap between silver and gold is widening and as the primary track between the performance of these two metals, the gold–silver spread has fallen drastically. A falling ratio is an indication that gold is becoming cheaper relative to silver. This ratio has significantly rebounded after touching the level of 72.
The gold–silver spread, or ratio, was trading at 76.3 on May 23, 2016. This means it takes about 76 ounces of silver to buy a single ounce of gold. The ratio stood at 73 at the beginning of May.
The leveraged funds that have jumped due to gains in gold and silver include the Direxion Daily Gold Miners ETF (NUGT) and the Proshares Ultra Silver ETF (AGQ). The mining stocks that also fluctuate due to price changes in these metals include Hecla Mining (HL), Barrick Gold (ABX), and Franco-Nevada (FNV).
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