Gold one-month risk reversals shed bullish bias
|- One-month risk reversals show falling demand for XAU calls.
- Long-run upside bias intact.
The XAU/USD (Gold) one-month 25 delta risk reversals, which shows the volatility premium for XAU put strikes vs XAU call strikes, fell to zero (neutral) today vs. 0.125 yesterday. The recent high of 0.40 was seen on Feb. 14.
The decline from 0.40 to 0.00 indicates falling implied volatility premium for XAU calls (buy gold) over XAU puts (sell gold). So, the options market has shed short-run bullish bias on gold.
That said, the long-run bullish outlook is still intact. The one-year 25 delta risk reversals are being paid at 0.65 XAU calls vs. January low of 0.0. The recent high was 0.70 XAU calls.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.