The resistance level of 122.50 that had caused a little trouble for the SPDR Gold Shares ETF (GLD – 127.15) did not hold up last week. In fact GLD never traded below 122.50 after gapping open on Monday. There were many gold bears coming into 2014 and they continue to either throw in the towel or be proven wrong by the march higher in the price of gold. The move continues to be orderly and bullish which results in low volatility for options on GLD and GVZ in the mid-teens. The big move this week is a bit above trend so a near term pullback is not out of the question, but the trend and the associated volatility market seem to be pointing to higher levels.
The United States Oil Fund (USO – 35.91) made 2014 highs this past week as well and has been up five weeks in a row. The continued grind higher for oil is resulting in low implied volatility in the price of USO options and historically low levels for OVX. One thing that may signal a rougher ride ahead is the shape of the OVX curve with pretty wide premiums in the April and May contracts relative to the index.