Gold bugs spend $180 million betting all's clear for metal as bond yields stall
Investors are aggressively purchasing call options for gold and gold-mining stocks following a period of market stagnation and weak U.S. jobs data. This surge in bullish sentiment suggests traders are betting on a potential shift in Federal Reserve interest rate policy.
Why it matters
Increased activity in gold markets often signals investor anxiety regarding economic stability and potential changes in monetary policy.
They are called gold bugs for a reason, because they sure are hard to get rid of. Despite a 25% decline in gold from its high in January, proponents of the precious metal are storming into bullish call positions after almost two months of sideways action gives way to a rally Friday following weak jobs data. Almost $100 million of call options in the SPDR Gold Shares (GLD) ETF were likely bought on Friday, SpotGamma data show, compared to about $25 million of puts bought. It's the same for the miners: over $80 million of GDX calls were bought, compared to just over $9 million in puts. Options volume in both surged, according to Cboe LiveVol data, with GLD on pace for twice its 30-day average and GDX quadrupling its typical trading volume.
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