The price of gold was dramatically unchanged this week with the SPDR Gold Shares ETF (GLD – 124.32) rising only 0.04. The option market took notice and GVZ dropped to the lowest closing levels since mid-April. The curve tells a little bit of a story about future market expectations. Despite GVZ losing about 7% on the week both the January and February GVZ futures rose on the week.
OVX was also lower on the week with a relatively quiet week in the underlying United States Oil (USO – 33.88) exchange traded fund. There are grumblings of a bearish outlook for the price of oil as futures are testing multi-month lows. However, oil volatility futures also dropped across the board on the week. This is the sort of price action the makes me think the oil volatility market does not see dramatically lower (or higher) price changes for oil over the next few months.