(OroyFinanzas.com) – During Asia session, the gold and silver bounced a little after yesterday´s sell-off. In Europe, we believe the weaker investors had exited the playground, thus allowing the black box funds to march in. That´s a jolly good correction off the high from $627 to $614. The crude oil continued its journey by sailing upward without looking back. And as a physical player, we still have the mentality of buying the dip, a die hard habit, a die hard gold fan.
The precious metals consolidated all its energy for the US to trigger the fireworks, watching the Wall Street failed to rise on the fourth day, aftermath of a three straight up session. Gold and silver hit 2-month high, while platinum prices jumped more than 3% after the dollar fell on news that China’s central bank chairman Zhou Xiaochuan said that China is considering various options to diversify part of the $1 trillion foreign exchange reserves. China is also considering lots of instruments for diversification. That’s interesting news, but the bottom line is we have suffered “so many false starts” in terms comments from Chinese officials about the country’s forex and reserves accumulation policy. At the end of the day the market has grown somewhat skeptical about this. On the other hand, we think we could see more volatility tomorrow as the other central bank heads will be addressing in Frankfurt alongside with the Bank of Japan and the European Central Bank.
With Crude and EUR looking bullish, punters are shopping for a good opportunity to get some cheap gamma/vega onboard. But as far as gold option strategy is concerned, the gold vols will not be softer, as spot has broken 630 and considering actual volatility has also increased. However market seems to be very long short dated strangles, thus this should keep spot very well within range.
MKS Gold & Silver, Daily Report
by Lidia Nazarova