The price of oil continues to hover around high levels with the September futures contact trading around 107.00 on Friday. The United States Oil Exchange Traded Fund (USO – 37.94) rose about 2% on the week and the orderly move in the price of oil put pressure on OVX which dropped just over 3%. The front end of the futures curve moved in line with the index while the farther dated futures did not move much.
The gold market has gotten everyone’s attention this year with some pretty dramatic drops. I noticed that despite a relatively tame week for the SPDR Gold Shares ETF (GLD – 126.36) which was off less that 2% the CBOE Gold ETF Volatility Index (GVZ – 24.24) rose over 9%. The futures curve, which was approaching a return to contango went back to backwardation as well. This action had me heading to the charts, specifically a daily chart of GLD which appears above. Note that there is a pretty well defined downtrend that has been in place for some time. It may just be that some gold bears are seeing GLD hitting against this downtrend and thing another dramatic drop is on the horizon.