The report points to a gold market under steady pressure from higher rates, a stronger dollar and elevated yields, with the removal of near-term rate cut expectations leaving fewer reasons for buyers to step in quickly. Steady options volume and easing, though still high, implied volatility suggest the sell-off has been orderly rather than disorderly, which may leave the market more sensitive to the next move in the Fed’s rate path or Treasury yields. Silver’s weaker price and slightly lighter activity show it is following the same rate pressure, with inflation worries the main offset. These are exchange figures and not forecasts, so the direction from here will depend on the dollar, yields and Fed commentary.
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Earlier:
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CME’s data show gold ending September well below its August peak with options activity steady and volatility easing, while silver slipped as Treasury yields climbed.
Summary:
- CME Group’s September metals options report shows gold ending the month around $4,270 an ounce, below an August peak near $4,680, a fall of about 9%.
- Average daily volume in gold monthly options was around 52,000 contracts and in weekly options around 25,000, both flat compared with August.
- CME’s gold volatility index has eased from the peaks reached earlier in the year but remains high compared with long-term averages.
- Drivers cited include Fed rate increases, a stronger dollar, elevated 10-year Treasury yields and geopolitical uncertainty, and FedWatch data shows expectations of immediate easing have been priced out.
- Traders are combining monthly options with daily expiries to fine-tune exposure across the front 30 days.
- Silver settled around $64 on Friday after falling more than 3% on the week, with options activity slightly softer than in August.
Gold slid through September as Federal Reserve rate increases, a stronger US dollar and elevated Treasury yields weighed on the market, according to CME Group’s September metals options report. The report shows gold ending the month around $4,270 an ounce, well below the August peak of around $4,680, a fall of about 9%.
Trading in gold options was steady even as prices fell. Average daily volume in monthly options was around 52,000 contracts and in weekly options around 25,000 contracts, both flat compared with August. That suggests the pullback has not yet triggered a surge in options activity, although the exchange noted that geopolitical uncertainty remained a feature of the market alongside the rate and dollar pressures.
Implied volatility, a measure of how large a move the options market expects, has been easing. CME’s gold volatility index has retreated steadily from the peaks reached earlier in the year, but it remains high compared with long-term averages. The exchange also noted that market participants have priced out expectations of near-term rate cuts, according to its FedWatch data, which removes one of the supports that has helped gold in the past. Higher rates and yields raise the opportunity cost of holding an asset that pays no interest.
The report also looked at how traders are positioning. It said participants are combining standard monthly options with daily expiries to fine-tune exposure across the front 30 days, a sign that short-dated risk management remains a priority in a market with elevated volatility.
Silver was weaker. It settled around $64 an ounce on Friday after falling more than 3% over the week, with rising Treasury yields putting pressure on prices. Options activity was slightly softer than in August, with average daily volume of about 6,500 contracts in monthly options and about 1,300 in weekly options. CME said silver’s dual role as both a precious metal and an industrial commodity continues to shape its trading, and that US inflation concerns provided some support.
With the Fed’s rate path, the dollar and Treasury yields all pointing in the same direction, gold and silver traders are likely to keep watching those drivers closely as the new quarter begins.
This article was written by Eamonn Sheridan at investinglive.com.