Gold risk reversals drop to 1-week low ahead of Yellen speech

Gold [XAU/USD] has formed a symmetrical triangle pattern on the 4-hour chart. Prices are trading flat lined around $1286/Oz levels this Friday morning. 

As discussed here, the investors have boosted downside bets i.e. put options ahead of the Yellen speech. It is feared that the central bank chief may throw caution to the wind and hint at a September balance sheet runoff and a December rate hike. 

Risk reversals drop

The one-month 25-delta risk reversal fell to 0.95; the lowest level since August 16. The decline from August 18 high of 1.475 indicates falling demand for the call options. 

Gold Technical levels

The symmetrical triangle resistance is seen at $1290 and the support stands at $1283 levels. A break higher would expose $1300 levels. On the downside, breach of support at $1283 could yield a sell-off to $1278 [4-hour 100-MA].