Gold - Put bias strengthens despite risk aversion

• No takers for gold despite risk aversion.
• The implied volatility premium for XAU puts (bearish bets) continues to rise.

Despite being a classic safe-haven asset, the bearish sentiment in the gold (XAU/USD) options market continues to strengthen.

The S&P 500 fell 30.45 points, or 1.1 percent, to 2,713.83 yesterday and the Dow Jones industrial average lost 380.83, or 1.5 percent, to 25,029.20. However, gold formed inside day doji candle, signaling indecision in the marketplace.

Also, the Asian equities are reporting losses, still the yellow metal finds no takers. As of writing, the yellow metal is trading around $1,315 - down 0.14 percent on the day.

Further, the risk reversals indicate the traders are expecting a further drop in the yellow metal. The one-month XAU/USD risk reversals gauge stands at -0.325 - the lowest level since Feb. 5. The negative print shows the implied volatility premium for XAU puts (bearish bets) is higher than the implied volatility premium for XAU calls (bullish bets). In simple terms, it means the demand for bearish bets continues to rise.

Gold Technical Levels

A break below $1,307.50 (Feb. 8 low) would open up downside towards $1,304 (100-day moving average) and $1,300 (major psychological support). On the higher side, breach of resistance at $1,318 (session high) could yield re-test of the 10-day moving average currently seen at $1,327 and $1,332 (50-day moving average).