Gold hits 12-day low, risk reversals retrace bullish bias

• Gold (XAU/USD) hit a 12-day low of $1,331.
• Risk reversals retrace XAU bullish bias.

Gold turned lower from the high of $1,355.72 on April 18 and fell to $1,331 today - the lowest level since April 10.

The repeated bull pattern failure has opened the doors for a deeper pullback, the daily chart indicates. Further, the rising Treasury yields complicate matters for the XAU bulls.

Hence, it is not surprising to see risk reversals retrace bullish bias. The one-month 25 delta risk reversals are being paid at 0.225 XAU calls vs the recent high of 1.525 XAU calls. The drop in the implied volatility premium for XAU calls (buy gold) indicates a drop in demand for the gold bullish bets.

Gold Technical Levels

 As of writing, the metal is trading at $1,333. Acceptance below $1,331 (50-day moving average) would open up downside towards $1,319.72 (April 6 low) and $1,308 (200-day MA). On the higher side, resistance is lined up at $$1,3371.71 (April 17 low), $1,341.83 (10-day moving average) and $1,344.75 (Jan. 15 high).