Much to the delight of gold bulls the price of gold was higher on the week and the SPDR Gold Shares ETF (GLD – 124.13) spent every day after Monday in the 120’s. The result was subsequent pressure on the implied volatility of GLD options and GVZ dropping to 24.07 on the week which is a drop of over 11% for the week. Fear is coming out of the gold market since the most recent leg down to the 115 levels.
The price of oil reached the 106 level last week based on more worries about supply disruptions from the Middle East combined with potential higher demand. The US Oil Fund ETF (USO – 37.56) was up over 2% on these fears as well. What is interesting is the reaction of OVX which actually dropped about 8% on the week. OVX usually spikes on new highs as many market participants often ‘panic’ in the face of higher oil prices. It may just be that the volatility market for oil is signaling lower oil prices as the summer drags on.