Gold risk reversals retrace bullish bias as prices
|- Gold (XAU/USD) risk reversals show demand for XAU calls has weakened.
- The metal trades below the 50-day moving average (MA).
The XAU/USD one month 25 delta risk reversals are being paid today at XAU 0.225 calls vs. XAU 0.40 calls last Thursday (recent high). The decline indicates the premium claimed by XAU calls over XAU puts has dropped, i.e the demand for bullish bets (calls) has weakened.
That said, the risk reversals are still holding well above the monthly low of -0.475 (or XAU 0.475 puts).
As of writing, the metal is trading just below the ascending 50-day MA of $1328. The rising Treasury yields and the pick up in the greenback seem to have weighed over the metal this week.
Gold Technical Levels
A break above $1330 (session high) would add credence to the upward sloping (bullish biased) 50-day MA and open doors for a sustained rise to $1340 (10-day MA) and $1346 (Feb. 6 high). On the downside, breach of support at $1324 (Jan. 18 low) could yield a pullback to $1316 (38.2% Fib R of Dec-Jan rally). A daily close below the same would allow for a bigger sell-off to $1300 (psychological level).
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