Gold: Value of call options hit 4.5-month high

• The value of gold's out of the money call options has hit the highest level since June 14.
• The options data validates the yellow metal's recent bullish break above the 100-day EMA.

Gold one-month 25 delta risk reversals (XAU1MRR) have risen to 0.65 - the highest level since June 14 - indicating the demand or implied volatility premium for cheap out of the money call options (bullish bets) is at the highest level in 4.5 months.

More importantly, the options market has turned bullish on the yellow metal over the last two weeks. This is evident from the fact that the risk reversal stood at -0.63 on Oct. 10. (A negative risk reversals imply that the implied volatility of put options is higher than that for call options)

The options data validates the bullish breakout in the yellow metal - prices rose to $1,239 per Oz on Tuesday, the highest level since July 17 and has found acceptance above the 100-day EMA.

XAU1MRR