Gold Price Forecast: Short-term bearish bias as Put option OI spikes
|Gold prices have dropped nearly $20 this week and the data published by the CME for Gold October expiry options suggests the losses could be extended further to $1260-1250 levels.
Gold OGX7 Open Interest Change: Current (Oct 16 - Prelim) vs Oct 13
| Call Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 106,043 | -1,510 | 18,035 | -120 | 88,008 | -1,390 |
| Put Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 77,712 | 1,605 | 7,732 | -11 | 69,980 | 1,616 |
- The open interest/open positions in call options fell by 1510 contracts on Monday and the open positions in put options jumped by 1605 contracts
- Clearly, the bearish investors not only squared off bullish bets (call options) but also boosted bearish bets (put options)
Gold OGX7 Open Interest Change: Current (Oct 16 - Prelim) vs Oct 9
| Call Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 106,043 | 1,294 | 18,035 | 89 | 88,008 | 1,205 |
| Put Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 77,712 | 3,315 | 7,732 | 87 | 69,980 | 3,228 |
- Over the last one week, the open positions in put options have gone up by 3315 contracts, while the open positions in calls have improved by 1294 contracts.
- Again, the bias is bearish
- It also indicates the investors lacked trust in the gold rally from $1283 (Oct 10 low) to $1306 (Monday's high).
Daily chart
- Lower high at the 50-DMA hurdle
- Stochastic has turned bearish
- RSI favors the bears
View
- Gold could re-test the 100-day moving average lined up at $1277 and may extend losses to $1260 (recent low). On the higher side, an end of the day close above $1306 (Monday's high) would revive the bullish move.
The long-run outlook remains bullish as discussed below:
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