Gold risk reversals flip bearish

Risk reversals on gold, a gauge of calls to puts, fell below zero on Thursday, indicating a bearish shift in the options market sentiment. 

The metric measures the spread between the premium claimed by calls and puts. A negative number means the put options are drawing a higher premium than calls, a sign of investors adding bets to positions for weakness in the yellow metal. 

A call option gives the holder the right to buy the underlying asset at a predetermined price on or before a specific date. A put option represents the right to sell. 

Risk reversals had jumped to a multi-month high of 1.35 last Friday. However, the demand for bullish bets or calls fell following Monday's 4.5% drop in gold's price in the spot market. The yellow metal is currently trading at $1,877 per ounce. 

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