This Week in Gold and Oil Volatility

Possibly following the lead of the equity markets this week both the Gold ETF (GLD – 152.97) and Oil ETF (USO – 33.60) lost value last week. Gold started its drop by (finally) breaking out a long term range to the downside last week. The low 150’s are starting to become the new support with not too much resistance above. USO was down over 3% as economic worries seemed to creep into that market as well. 

The week over week change in GVZ does not do the price action justice. GVZ gained 2.26% on the week, but was much higher as the low 150’s were tested on Wednesday. The March future traded up to an 18 handle reaching the highest levels over the life of that contract before settling down to 16.80. The overall GVZ curve flattened this past week to indicate the risk of a next leg down (or quick rebound in GLD) is not necessarily being priced into the markets.

OVX has remained in the 20’s despite being surrounded by lower gold and equity market volatility. The shift in the curve of OVX futures prices was the most parallel of all the volatility curves this last week. If you are looking for a volatility market to trade, oil may be the place to look, at least that’s what the volatility markets are looking for.