Because of political tensions in Middle East Japanese Yen Future and 10-year U.S Bond Future lose 0.41 percent and 0.10 percent respectively. However, gold futures gained 0.91 percent. Bloomberg Intelligence-based analyst, Mike McGlone suggests some key points:
“The best month of the year for gold typically in January. A good question why but I think it’s New Assets have come in but the last five years the average change in gold has been 5%. So when you see in this chart here I think, let’s look at first the magenta line. You can see this trending higher shifting up to higher, but the sign also is this midpoint here and go that’s the middle point of the range of the bear market gold’s cross that demarcation line. It’s heading higher and it took six months of consolidation to build that trend also. What’s notable is volatility implied and options see this bottom here. That’s the 12-month average of implied volatility calls and puts that low here was the lowest in about 20 years. So market training higher volatility to bottom. That’s a pretty good sign if I look at is a new of actually a recovering bull market because it’s got plenty of room to get back to the old house.
Let’s take a look at how you would handle options on gold futures and you, of course, were first an options trader back in the day so we’re very happy to have your expertise here Chicago Board of Trade, not a CME I look at that and say the markets going higher volatility is low calls by default so you should be looking a calls buying calls on dips I didn’t think that’s where the value is and the key risk is your time decay I think the greater potential is an acceleration or breakout in the market which would kick the calls in”
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