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Gold - risk reversals hit 5-month low

  • Risk reversals shows increased demand for Puts
  • Gold hovers near Oct. lows

Gold's (XAU/USD) drop below the 200-day MA earlier this week and a move to Oct, low of $1260 has revived demand for the bearish bets on the yellow metal.

Risk reversals

The one-month 25 delta risk reversals gauge fell to -0.85; the lowest level since Jul. 14. It shows rising demand for gold (XAU) puts.

As of writing, gold is trading at  $1263/Oz levels. Repeated failure to scale $1300 in late November finally turned the tables in favor of the bears. Prices closed below the 200-day MA on Tuesday, still, the metal has managed to defend the support of Oct low of $1260.

However, the rising demand for put options means the support could be breached soon.

Gold Technical Levels

A break below $1260 (Oct. low) could yield a sell-off to $1254.16 (Aug. 4 low) and $1249.94 (Aug. 8 low). On the higher side, breach of resistance at $1267 (200-day MA) would open up upside towards $1278 (10-day MA) and $1280 (50-day MA).

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