Search ForexCrunch

Gold’s one-month risk reversal, which measures the spread between call and put prices, rose to 0.050 on Monday – the highest level since March 15, 2020, also reversing the previous day’s declines of 0.075, indicating increased demand for call options.  

A call option gives the purchaser the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date.  

Therefore, a rise in the one-month risk reversal suggests investors are adding bets to position for strength in the yellow metal.  

This came at a time when the yellow metal posted the heaviest losses in a month.

That said, the bullion extends the previous day’s downside momentum while flashing 0.30% intraday losses to $1,707.21 by the press time.

Read:  Gold Price Analysis: XAU/USD sellers roll-up sleeves to revisit $1,700