Gold futures managed to post a gain in Q1 2018 to mark its third consecutive quarterly advance. To put the uptick in perspective it should be noted that the latest quarterly gain was the smallest recorded since 2011.
Gold managed a gain of just 1.03% while other precious metals failed to post a gain. Silver lost 5.1% while platinum pulled back by nearly 1.2% and palladium slid a staggering 11%.
Prices hit a two-year high in the second week of Q2 pushing gold’s advance over the 3% mark for the year.
Gold prices are utilized as a gauge of investor risk appetite under normal trading conditions. As a new quarter gets under way the equity markets continue to see plenty of swings to the upside and downside. Traditionally gold is seen as a hedge against inflation.
Gold prices are a long way from their all-time record high of $1,917.90 an ounce seen in 2011. Nevertheless, gold has outperformed the stock market in Q1 2018 and continues to edge higher. Any breakout to the upside will be eyed as, perhaps, an indication of the broader market outlook.
In addition, gold contracts continued to see record volume in Q1 2018. Surprisingly the latest quarter extended volume records to mark the fifth consecutive quarter of an increase in volume.
While volume itself is not an indicator of future price action it is telling of the conviction of any move, especially when there is a technical level that is surpassed or broken.
Despite the extended increase in volume for gold contracts and the slow trek higher for prices, the move into the precious metals and related ETFs has not been as positive as one would expect. This may be another sign that there are no major issues on the horizon for the equity markets.
Spot gold may seem to be stuck in a perpetual consolidation range while prices play tug-of-war with bullish and bearish phases. In the meantime, the technical levels will continue to serve as a test of strength over the central line.