One-month risk reversal on gold, which measures the price of calls relative to puts, is currently trading at -0.12 in favor of puts – derivative contracts that give the purchaser the right but not the obligation to sell the underlying asset at a predetermined price on or before a specific date.
In other words, investors are adding bets to position for weakness in gold. Risk reversal flipped bearish earlier this month, having registered a high of 1.60 in favor of calls or bullish bets on Feb. 1.
Gold is currently trading near $1,820 per ounce, representing a 0.29% drop on the day. The yellow metal may suffer more profound losses if the greenback, gold’s biggest nemesis, rises as anticipated by strategists at Bank of America.
Share
