Gold risk reversals shed bearish bias

• Gold (XAU/USD) risk reversals hit a 7-week high.
• Spot gold looks set to revisit 2017 high of $1357.54.

Gold (XAU/USD) one-month 25 delta risk reversals rose to a 7-week high of -0.175 yesterday, indicating a drop in demand for bearish bets (put) on the XAU. The risk reversals gauge bottomed out at -1.375 on Dec. 8. The sharp rise from -1.375 to -0.175 only adds credence to the bullish move in spot gold.

Reuters technicals report says the metal could revisit 2017 high of $1357.54.

Key points (source: Reuters)

The analysis is on the downtrend from $1,357.54 to the Dec. 12 low of $1,235.92. It reveals that gold has briefly pierced above the 86.4 percent level at $1,341. Chances are high that the metal extends its gain to $1,357.54.

A projection analysis and a falling trendline on the daily chart suggest a similar target at $1,354, the 50 percent level of an upward wave C.

A drop below the Jan. 15 low of $1,335.65 (first chart) could be extended to $1,329.