This Week in Gold and Oil Volatility

This past week the price of gold was very volatile and the price action in the GVZ reacted to this. The GVZ was the biggest mover in the tradable volatility index area rising 13.21%. This rally was based on a 2.5% rise in the price of gold. This past week is a great example of what makes gold volatility so unique. GVZ often moves up when the price of gold has a large move higher or lower. Many other volatility indexes (VIX, VXN, VXEEM, VXEWZ) have an inverse relationship to the price of the underlying indexes. For GVZ the volatility moves come with both higher and lower gold prices.

The USO dropped 1.5% last week as the price of oil was down week over week. Crude was under pressure on Monday as well but then worked higher throughout the rest of the week. The result of this price action along with oil being sort of mid-range relative to recent price history was a lower OVX. The OVX was the lone tradable volatility index that lost value last week. The futures prices were lower as well, but did not drop as much as the index. A result there was the curve of OVX prices moving closer to a historically ‘normal’ shape.

A final note – there is no November price comparison to work with this week as November GVZ and OVX contracts were listed this past week. The closing prices are included on the tables.