Gold and Oil Volatility – Week of 6/21/2013

For those that follow technical analysis and support and resistance levels you understand that when support is broken it becomes resistance for a market.  The price of gold in the form of the SPDR Gold Shares ETF (GLD – 125.05) had been holding the 130 – 131 level for the past few weeks since dropping tremendously in mid-April.   That level finally gave in on Thursday as GLD gapped lower on the open to 125.22 before ending the day down 6.99 to 123.60.  Friday saw a rebound to 125.05 but also we witnessed a return to high volatility with GVZ rising just over 30% on the week.  Just a few days ago the GVZ curve had returned to contango and went right back to backwardation.  We now can consider the low 130’s as resistance for GLD and time will tell what the new support level will be.

The United States Oil ETF (USO – 33.23) dropped about 5% on the week and the CBOE Crude Oil ETF Volatility Index (OVX – 23.66) responded by rising 11.5% on the week.  Out of the six tradable volatility indexes listed at the CBOE, OVX was the only one that closed with what would be considered a ‘normal’ shape to the curve of futures prices for most of the week.



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