Commodities markets just closed in the U.S. and it was another good day for gold as the yellow metal gained 1.2% to close at $1,292.50 per troy ounce. Gold’s ongoing flirtation with $1,300 an ounce, which could be legitimized as early as Wednesday, has the commodity trading at its highest levels since July.
With bullion up 9.3% to start 2015, traders are not being shy about betting on more upside for gold and ETFs such as the SPDR Gold Shares (NYSEArca: GLD), the world’s largest gold ETF.
“Options activity has been highly elevated in the GLD,” said CNBC contributor Michael Khouw. “Khouw noted that a number of traders bought the April 145-strike calls for 60 cents on Friday, a bet that the GLD will rise approximately 18 percent to $145.60 by April expiration,” according to CNBC.
That jibs with other options data that show traders betting on more gains for gold futures.
“Aggregate open interest in gold futures on Jan. 15 surged 5.6 percent, the most since October 2009. Gold climbed to a four-month high on Friday, while call options for the right to own February futures at $1,300 an ounce soared sevenfold in two days,” report Joe Deaux and Laura Clarke for Bloomberg.
After losing $3.2 billion in assets last year, one of the worst totals among all ETFs, GLD saw inflows of nearly $504 million last week, a number surpassed by just four other ETFs. [A Bad Place for Gold Shorts]
Trading at just over $124, GLD resides at its highest levels since August.
After the Swiss National Bank shocked financial markets by scrapping the franc’s peg to the euro, GLD gained about 3% last Thursday, moving above its 200-day moving average for the first time since September, stoking speculation that the franc’s rally could spark a commodities countertrend that would ignite a raft of short covering across the commodities complex. [Swissie Could Stoke Commodities Rebound]
Ahead of the European Central Bank meeting Thursday, investors are flocking to gold ETFs on expectations the ECB will unveil its own quantitative easing measures that could boost the allure of gold as a safe-haven asset.
GLD’s move above the $122 level, which was a resistance area created by an inverse head and shoulders pattern, could be harbinger of a near-term move to $130.
SPDR Gold Shares
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD.