Gold 1-month risk reversals have lost call bias

• XAU/USD (Gold) one-month 25 delta risk reversals have lost call bias
• May adopt a bearish bias today if USD weakness (gold strength) fizzles

Gold (XAU/USD) fell to $1272 levels on Monday; the lowest since Oct 6 before recovering to $1282 levels. The technical recovery happened on the back of moderate USD weakness. The greenback weakened focus shifted to who would be the next Fed head.  

Risk Reversals

One-month 25 delta risk reversals gauge fell to zero; indicating the options market is no longer bullish on the yellow metal.

The gauge could turn negative (adopt a bearish bias) if the technical recovery in gold falls apart today. If extension of the technical recovery today fails to keep risk reversals from falling into negative territory, it could indicate a bull trap/gains to be short lived.