Key Takeaways with Craig

Once again, we are writing an abbreviated version of the Key Takeaways section due to vacation schedules and today, will be taking a closer look at the Gold futures and options market.  Gold futures are up by about .5% from yesterday’s close today and, at about $2,050 per ounce, continue to trade within a few percent of the all-time high that was recorded earlier this month. 

The top graph below, copied from CME’s CVOL tool, shows the path that the price of Gold futures have taken to this point this year.  As you can see, it spiked in March of this year, coinciding with the Silicon Valley Bank failure, remained range bound for most of the summer before declining in the beginning of October then rallying to the levels we see today. The lower graph depicts the CVOL level in Gold options over the last year and, as you can see, shows that options CVOL, at about 13, is slightly under the one-year average of 14.2, after declining after the spikes in March, October and December. 

Throughout the year, we also pointed out in this column, the relationship between interest rates and Gold prices on a daily or weekly basis.  Using CME’s cross correlation tool, it does indeed look like that relationship has strengthened over the last 12 months.  Over the last five years, the correlation between 10-Year Treasury prices (remember, prices and yields move inversely to one another) and Gold prices was .36; over the last three years this rose to .41 and over the last year, this correlation rose to .51.  

Today's Future Price Action

Traders Resources

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