Gold risk reversals: Bullish bias weakest since April 9

Gold (XAU/USD) risk reversals continue to retrace bullish bias.
Adds credence to the recent decline in gold prices.

Gold one-month 25 delta risk reversals (XAU1MRR) are being paid at 1.025 XAU calls (lowest level since April 9) vs the recent high of 2.20 XAU calls.

The drop in the implied volatility premium for XAU calls indicates falling demand for the bullish bets or weakening bullish bias. The data also adds credence to the recent decline in gold prices from $1,355 to $1,317 and indicates the investors expect a further pullback in gold prices.

XAU1MRR

Apr 27, 2018

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