Gold risk reversals show rising demand for bearish bets

The drop in gold prices has revived interest in put options. Risk reversals turned negative on Feb. 22.

The double top-like pattern seen in gold's (XAU/USD) daily chart seems to have revived interest in the bearish bets - put options.

The XAU/USD one-month 25 delta risk reversals turned negative on Feb. 22 and hit a low of -0.30 yesterday. As of writing, it is seen at -0.25. The decline from the Feb. 15 high of 0.40 indicates the implied volatility of XAU puts has increased sharply, signaling a rising demand for bearish bets.

It also means investors see scope for a bigger drop in the safe haven yellow metal.

Gold risk reversals

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