Gold risk reversals hit highest since 2011 on call demand

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Risk reversals on gold (XAU/USD), a gauge of calls to puts on the yellow metal, rose to their highest level since September 2011 on Monday, indicating are adding bets to position for further strength prolonged strength in the safe-haven metal.

Gold risk reversals hit highest since 2011

One-year risk reversals (XAU1YRR) rose to 2.575 in favor of XAU calls. The positive number indicates the demand or implied volatility premium for calls options (bullish bets) is higher than that for put options.

The yellow metal jumped to $1,348 on , the highest level since April . As of writing, it is trading at $1,330 per Oz.

Prices rallied from $1,269 to $1,348 in the last three weeks as pull forward expectations of Fed rate cuts. The Fed funds futures are currently pricing three rate cuts for 2019.

We found this article at By: Omkar Godbole