Gold fell to lowest level since Dec. 26, calls lose value

• Gold (XAU/USD) fell to $1,275 - the lowest level since Dec. 26 on Friday, confirming a bearish revival.
• The XAU calls shed value after sharp sell-off in gold prices.

Gold fell to fresh 2018 low of $1,275 on Friday, having failed to scale the key resistance at $1,302.76 in a convincing manner for three straight weeks.

The sell-off put focus back on the double top reversal seen in mid-May and has opened doors for a drop to $1,240 (double top breakdown target as per the measured height method).

Also, the demand for XAU calls weakened following a drop to 2018 lows, risk reversals indicate.

XAU/USD one-month 25 delta risk reversals fell to 0.40 today - the lowest level since May 23, signaling falling demand or falling implied volatility premium for XAU calls.

Gold Technical Levels

As of writing, the yellow metal is changing hands at $1,281/Oz.

Resistance: $1,282 (May 21 low), $1,288 (June 1 low), $1,300 (psychological level).

Support: $1,275 (100-week moving average), $1,260 (October 2017 low), $1,236.45 (December 2017 low).