This morning, wrote:
Gold is losing its luster in the options market.
The metal has tumbled 13 percent since mid-March and traders are increasing bets that further declines are coming. The cost of puts on the SPDR Gold Trust (GLD) has reached the highest level in nine months relative to calls, while a measure of the exchange-traded fund?s volatility surged almost 50 percent last month.
Faster economic growth and speculation the Federal Reserve will tighten monetary policy has propelled the dollar to a four-year high and hurt demand for gold, often used as a hedge against inflation. Hedge funds and other speculators have pared bets on rising gold prices for the past seven weeks, the longest stretch since 2010. Goldman Sachs Group Inc., Societe Generale SA and HSBC Securities (USA) say they expect lower prices.
?There?s no point in buying gold,? John Stephenson, chief executive officer at Stephenson & Co. Capital Management in Toronto, said in a phone interview. The firm manages about C$45 million ($40 million). ?You?ve got gold looking weaker because the U.S. dollar looks stronger, and that?s the first and most important factor.?
The $30 billion gold ETF, the biggest fund tracking bullion prices, sank 6.2 percent last month, the most since June 2013. For the year, it?s down 0.1 percent after soaring 15 percent to a high in March.
Put contracts betting on losses in the shares cost 3.9 points more than call options wagering on a rise, according to three-month data compiled by Bloomberg. The spread, known as skew, increased to 4.4 points on Oct. 3, the widest since Dec. 24.
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