Gold: Bullish bets in demand amid risk-off

Gold risk reversals show strongest bullish bias in 7.5-weeks.
The yellow metal seems to have lost its mojo in the last few days, despite the risk aversion.

Omkar Godbole FXStreet Contributor

Bullish bets or call options on gold are drawing bids, according to risk reversals, a gauge of calls to puts on the safe-haven metal.

One-month risk reversals (XAU1MRR) rose to 2.725 on Thursday to hit the highest level since Jan. 6, having bottomed out at 0.85 on Feb. 12.

The near-90 degree surge seen over the last two weeks indicates a rise in demand or implied volatility premium for call options – a sign investors are expecting gold to rise on coronavirus-led risk aversion in the equities and are adding bets to position for gains in the yellow metal.

However, while risk reversals are gaining altitude, the spot price is struggling. Gold hit a high of seven-year high of $1,689 on Monday and fell back to $1,625 on Wednesday. At press time, the safe-haven metal is changing hands at $1,642 per Oz.

Gold isn't finding takers in Asia despite the overnight drop in the US equities and the losses in the Asian stocks. The Dow Jones Industrial Average fell by over 1,200 points on Thursday, confirming its worst four-day losing streak since the 2008 financial crisis. Meanwhile, at press time, major Asian indices like Nikkie, Hang Seng, Kospi, and the Shanghai Composite are down 3% to 4.3%.

XAU1MRR

Technical levels

XAU/USD

Overview
Today last price	1642.1
Today Daily Change	4.99
Today Daily Change %	0.30
Today daily open	1637.11

Trends
Daily SMA20	1595.16
Daily SMA50	1564.04
Daily SMA100	1520.83
Daily SMA200	1481.66

Levels
Previous Daily High	1660.36
Previous Daily Low	1635.85
Previous Weekly High	1649.32
Previous Weekly Low	1578.88
Previous Monthly High	1611.53
Previous Monthly Low	1517.1
Daily Fibonacci 38.2%	1651
Daily Fibonacci 61.8%	1645.21
Daily Pivot Point S1	1628.52
Daily Pivot Point S2	1619.93
Daily Pivot Point S3	1604.01
Daily Pivot Point R1	1653.03
Daily Pivot Point R2	1668.95
Daily Pivot Point R3	1677.54

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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