This Week in Gold and Oil Volatility – 8/23/2013

The price of gold continued higher this week and closed at the highest level of the summer.   The SPDR Gold Shares (GLD – 134.90) broke above 130.00 two weeks ago and has not looked back.  Initially this break through resistance was met by a coincident rise in implied volatility.  The CBOE Gold ETF Volatility Index (GVZ – 22.63) ticked up when GLD broke through resistance and is now settling down based on GLD maintaining a steady uptrend.  Price action for the GLD fund going back to the memorable drop in April is below.  The price level of 130.00 is highlighted as well.  It was a good support level after the drop in the spring, became resistance and is now appears to be a key support level.  Any near term break of 130.00 may be met by a move higher in GVZ.

Gold Chart

The United States Oil Fund (USO – 37.95) was down slightly on the week after having been in a bullish trend.  This pause in the uptrend was met with an interesting drop of over 5% for the CBOE Crude Oil ETF Volatility Index (OVX – 22.70) which dropped over 5% on the week.  The result was also a fairly normal shift in the OVX price curve as well.  It may be less volatility will appear in the energy markets for the time being.  At least that’s what volatility traders think.

GVZ OVX

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Russell Rhoads, CFA

CBOE Options Institute

Russell Rhoads, CFA, is a Senior Instructor with the Options Institute at the Chicago Board Options Exchange. He joined the Institute in 2008 after a career as an investment analyst and trader with a variety of firms including Highland Capital Management, Caldwell & Orkin Investment Counsel, TradeLink Securities and…

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