Gold - Bearish bias strengthens as per the options market

Omkar Godbole FXStreet Contributor

Gold (XAU/USD) one-month 25 delta risk reversals (XAU1MRR) are being paid at 0.25 XAU puts vs. 0.20 XAU puts yesterday and 0.23 XAU calls on March 7.

The rise in the implied volatility premium of XAU puts indicates rising demand for bearish bets. Also, the chart shows the risk reversals are creating a head and shoulders pattern, meaning the downside bias is likely to strengthen further.

The strengthening bearish bias in the options market also means investors are expecting the yellow metal to revisit recent lows around $1,310-$1,300 soon.

XAU1MRR

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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