Precious Metals: A Weak Start To Q2, But Still Looking Good

London (Apr 11)  Precious metals have experienced a quiet start to the second quarter of 2016 when it comes performance, but that does not mean there has not been volatility. Gold finished Q1 at $1234.20, up 16.41% for the first three months of the year, and it closed last Friday at $1242 per ounce. Silver was up 11.86% in Q1 at a price of $15.44; it was trading at $15.32 at the end of last week. Platinum gained 9.52%, closing on March 31 at $976.60; last Friday, the price stood at $966.60.

Over the first days of April, each of these metals moved lower. Gold traded down to lows of $1210.30 on April 1, while silver fell to $14.785 on the same day. Platinum reached $938.10 on April 5. The performance of all three of these metals that have a history of taking the stairs up and the elevator down has been impressive, even during the first six trading days of the second quarter of the year.

Gold continues to be the strongest

Gold continues to work its way higher in a trend that started on the very first day of this year.

As the daily chart of active-month June COMEX gold highlights, April began with price weakness, but gold was quick to snap back, rallying over $30, or just under 3%, from the lows on the first day of the month. The slow stochastic, a momentum indicator, shows that the path of least resistance for the yellow metal is higher. Momentum and relative strength measures remain in neutral territory, telling us that there are no technical roadblocks to further gains for gold at this time. Additionally, open interest in gold has turned higher. In late March, we saw the total number of open long and short positions in COMEX gold futures edge lower as some longs took profits at the end of the quarter. Hedge funds and other money managers are paid on quarterly results, so it came as no surprise that they locked in some profits in the market that was one of the best-performing assets for the period. Open interest is now starting to rise again alongside marginal price gains; this provides technical support for the price of gold.

Source: SeekingAlpha