Gold risk reversals hit 3.5-month high on call demand

• Investors are buying call options on gold, risk reversals indicate. 
• The yellow metal is trading at the highest level since April 2013.

One-month risk reversal (XAU1MRR) on gold, a gauge of calls to puts, has jumped to 3.375  to hit the highest level since Sept. 24, indicating the investors are adding bets to position for a continued rally in the yellow metal.

A positive number indicates the implied volatility premium or demand for call options (bullish bets) is higher than that for puts (bearish bets). 

The gauge has risen sharply from 0.75 to 3.375 in just ten days and indicates an increased demand for call options. 

The surge validates or confirms the uptrend in prices. The yellow metal is currently trading at $1,580 per Oz, representing a 4% gain on a month-to-date basis. Prices rose 3.66% in December. 

XAU1MRR