Gold one-year risk reversals hit lowest since June


  • Demand for gold call options has weakened over the last four weeks, risk reversals indicate. 
  • One-year risk reversals have dropped to multi-month lows despite coronavirus fears. 

Gold one-year risk reversals, a gauge of calls to puts on the yellow metal and a barometer of positioning and sentiment, fell to the lowest level in eight months on Monday, indicating a weakening of demand for the call options or bullish bets. 

The risk reversals declined to 3.125, a level last seen on June 21, having topped out at 4.425 in the first week of January, when the US-Iran tensions had triggered a flight to safety and put a haven bid under gold. 

The yellow metal is currently trading at $1,570, having hit a high of $1,611 on Jan. 8. The markets have been recently roiled by coronavirus and fears of a sharp slowdown in China's economy.  

So far, however, that has failed to invite stronger demand for call options on gold, as indicated by the slide in the risk reversals. 

A call option gives the holder a right but not the obligation to buy assets at an agreed price on or before a particular date. A put option is the right to sell. 

A negative risk reversal indicates the premium claimed by puts (or demand) is higher than that for calls. 

  • FXstreet Indonesian Site - new domain! Access it ad www.fxstreet-id.com

XAU1YRR

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD trying to set an interim bottom

EUR/USD has been consolidating around 1.0800 for a second consecutive day, ignoring risk-off and broad dollar’s demand. The case for a corrective advance becomes stronger.

EUR/USD News

USD/JPY stabilizes around 112.00 fresh 2020 highs

The USD/JPY pair has finally stalled at 112.22 but holds on to most of its latest gains. Buyers defending the downside in the 111.60/70 price zone.

USD/JPY News

AUD/USD at an over one-decade low near 0.6600

An uptick in the Australian unemployment rate, moving further away from RBA’s desired 4.5% level took its toll on the Aussie, also pressured by ruling risk-off.

AUD/USD News

Gold jumps to the highest level since February 2013, around $1620 area

Gold reversed an early dip to the $1604 area and jumped to fresh multi-year tops during the mid-European session on Thursday.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex MAJORS

Cryptocurrencies

Signatures