This Week in Gold and Oil Volatility – 12/13/2013

The price of gold continues to languish close to 2013 lows.  This past week the trading range was not anything to get too excited about and the SPDR Gold Shares ETF (GLD – 119.38) was actually slightly higher on a week over week basis.  However, there seems to be a bit more risk creeping into the outlook for the yellow metal.  Things were looking good early in the week as GLD worked back over 120.00.  However by the end of the week GLD was back under 120.00 (round numbers are always ‘psychologically’ significant ‘they’ say).  Also, this was only the second time this year that GLD closed under 120.00 for two consecutive weeks.  The difference this time is that GVZ moved up despite the relatively calm week.  Back in July (when GLD closed two consecutive weeks under 120.00) GVZ was down over 10% on the week.  This time GVZ rose, higher implied volatility means more uncertainty and with GLD pretty close to 2013 lows the uncertainty is that GLD may not be done putting in lower lows for 2013.  For a visual reference to all of this I included a weekly GLD chart for 2013 with a prominent line showing the 2013 intraday low of 114.68.

Gold Chart

If gold and oil were children then oil would be my neglected child in this space this year.  The United States OIL ETF (USO – 34.64) just hasn’t give me much to write about.  Volatility in this space has generally moved lower for the year as potential fireworks in the Middle East never result in a supply disruption.  The relative calm price of oil in 2013 is probably a good thing for the overall economy, but if oil wants more press the market needs to provide the material.