The price of gold as indicated by the SPDR Gold Shares ETF (GLD – 133.76) held the 130 level which may be developing as the new level of support. I even saw where some technically minded traders are calling the action in GLD a double bottom. So far that appears to be what is developing. The ability of the gold market to not begin another ugly and dramatic move to the downside resulted in a drop in gold volatility. GVZ dropped 12% on the week, but note the rest of the curve hardly budged. The futures markets have been discounting a pending drop in the spot index and were proven correct this past week.
The other traded commodity related volatility market, oil, was down slightly on the week as measured by the United States Oil ETF (USO – 33.37) and the drop was fairly orderly in nature. Volatility indexes can react based on a combination of price movements out of the underlying along with how those price changes occurred. OVX dropped slightly, but the futures actually gained slightly on the week. The steep angle of the OVX curve makes me wonder if some sort of volatility is expected in the oil market this summer.