Gold risk reversals: Bullish bias is strongest since September 2011

• Risk reversals hit 6.5 year high, indicating a strong bullish bias.

Gold (XAU/USD) one-month 25 delta risk reversals (XAU1MRR) rose to 2.15 on Wednesday - the highest level since Sept. 12, 2011 vs 0.575 seen on March 27.

The sharp rise in the implied volatility premium for XAU calls indicates rising demand for the XAU bullish bets (call options), i.e. investors expect further rise in the yellow metal and adds credence to the bull flag breakout seen in the daily chart.

XAU1MRR