Gold: Bullish bias in options market strongest since early September

• Gold (XAU/USD) risk reversals rise to highest level since Sep. 6, indicate strong bullish bias. 
• A sharp rise in the risk reversals indicates scope for a bullish break in gold. 

The XAU/USD one-month 25 delta risk reversals (XAU1MRR) are being paid at 1.025 XAU calls vs. 0.525 XAU puts. It indicates the implied volatility premium for XAU calls is now more than those for XAU puts, i.e. demand for gold bullish bets is on the rise. 

The risk reversals number adds credence to the recent rise in gold prices (from $1,311 to $1,355) and could be an indication the investors are seeking upside protection against a potential bull flag breakout. 

XAU1MRR