Gold risk reversals: Bullish bias is strongest since November 2009

Omkar Godbole FXStreet Contributor

Risk reversals on gold, a gauge of calls to puts on the yellow metal, rose to their highest level since November 2009 on Wednesday, indicating investors are adding bets to position for a sustained rally in the zero-yielding metal.

One-month risk reversals (XAU1MRR) are currently trading at 2.375 in favor of call options (bullish bets) - a level last seen in mid-November 2009.

A positive number indicates the implied volatility or demand for call options is higher than that for put options. Put simply, the bullish bias is the strongest in a decade.

Gold is currently trading at $1,344 per Oz, having hit a 13-month high of $1,358 on Friday. More importantly, prices have rallied nearly 6 percent over the last 2.5 weeks.

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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