Gold drops in Asia, risk reversals tune negative

Gold prices dropped to $1332.88 in Asia as North Korea inaction over the weekend forced investors to unwind the longs initiated over the weekend.  

The losses in the yellow metal are accompanied by the strength in the Dollar Indx [dxy]. The greenback is trading around 91.55 against the basket of currencies. 

The strong Chinese PPI data released over the weekend is likely to keep the risk assets well bid in Europe and America. Thus, the yellow metal may suffer further losses during the day ahead. 

Risk Reversls turn negative

The one-month 25-delta risk reversals gauge [currently at -0.05] has turned negative for the first time since Aug. 8. The negative print indicates increased demand for downside protection, i.e. Put options. 

Gold Technical Levels

A break below the immediate support at $1330.16 [10-DMA] would open doors for a sell-off to $1325.99 [Aug 29 high]. On the higher side, breach of hurdle at $1346.61 [session high] would expose Friday's high of $1357.50.