This Week in Gold and Oil Volatility – 1/10/2014

I always write about gold first in this space so instead I will start with oil.  Oil volatility is low and the corresponding OVX futures contracts signal that the market does not expect much price action out in the oil market any time soon.   Now on to the more interesting market these days.

The SPRD Gold Shares ETF (GLD – 120.26) seems to be fighting the bears and working higher in some baby steps.  Traders keep calling for a drop to new lows, but despite their bearish talk, the price of gold hasn’t broken down to a significant new low in months.  Not that it didn’t try to break lower a couple of weeks ago.  The volatility of gold is pretty darn low with GVZ losing 10% last week and now at 17.27.  Now the curve of pricing below, there continues to be some premium looking out to March or April.  However, do remember that a big move up in the price of gold can result in a higher GVZ.  Don’t be surprised if the next volatility event in gold is a price move up instead of down.