Gold’s one-month risk reversal, which measures the spread between buy and sell prices, fell to -1.80 on Friday, the lowest level since March 2020, extending the drop from the February 1 high of 1.60. , indicating a higher demand for put options.
A put option gives the buyer the right, but not the obligation, to buy the underlying asset at a predetermined price on or before a specified date.
Therefore, the drop in the one-month risk reversal to the low since March 2020 suggests that investors are adding bets to the position on the weakness of the yellow metal.
Gold faced selling pressure last week and fell more than 2.8% to $ 1,717 an ounce, the lowest level since June 2020, as US Treasury yields rebounded.
At time of writing, the metal is trading close to $ 1,754.
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