Danger reversals on gold (XAU/USD), a gauge of calls to puts on the yellow metal, increased to their highest level given that September 2011 on Monday, showing financiers are adding bets to position for more strength prolonged strength in the safe-haven metal.
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1 year threat reversals (XAU1YRR) increased to 2.575 in favor of XAU calls. The positive number shows the demand or indicated volatility premium for calls alternatives (bullish bets) is higher than that for put alternatives.
Rates rallied from $1,269 to $1,348 in the last 3 weeks as markets pull forward expectations of Fed rate cuts. The Fed funds futures are presently pricing 3 rate cuts for 2019.
We discovered this post at https://www.fxstreet.com/news/gold-risk-reversals-hit-highest-since-2011-on-call-demand-201906100200 By: Omkar Godbole
The yellow metal jumped to $1,348 on Friday, the greatest level given that April 2018. As of writing, it is trading at $1,330 per Oz.