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relates to Fed’s Clarida Dismisses Weak Retail Sales, Says Outlook Solid relates to Stocks Mixed, Bonds Rise as Investors Weigh Trade: Markets Wrap relates to Charting the World Economy: Fed Stokes the Hot U.S. Jobs Market relates to Williams Says Fed Cuts Have Put U.S. Economy on ‘Strong Footing’ relates to Oddest Rally of Week: Argentine Bonds Surge as Leftist Sworn In relates to U.K. Assets Rally as Johnson Landslide Sweeps Through Market relates to Reinhart Warns Argentina May Repeat 15-Year Bond Holdout Saga relates to European CLO Debt Looks Too Good to Ignore in 2020 relates to Emerging Markets Cut Rates With Russia Following Turkey, Brazil
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Bold Bets That Gold Could Triple to $4,000 Trade in New York

Updated on

Bold Bets That Gold Could Triple to $4,000 Trade in New York

Gold May Rally Above $1,560, Hedge Fund Telemetry's Thornton Says

The gold options market saw $1.75 million in block trades betting the precious metal could almost triple in more than a year, surpassing the record.

Around noon in New York Wednesday, 5,000 lots of a gold option giving the holder the right to buy the precious metal at $4,000 an ounce in June 2021 changed hands. The bets were sold at $3.50 an ounce.

“It’s like 18-month term life insurance; what will the world look like if gold is at $4,000,” Tai Wong, the head of metals derivatives trading at BMO Capital Markets, said in an email. “They are hoping for a quick violent move,” he said, referring to the people who bought the call options.

Gold futures climbed to a record $1,923.70 an ounce in 2011 as the Federal Reserve bought more than $2 trillion of debt to stimulate the U.S. economy. While bullion has rallied 14% this year, the precious metal is still 24% below the current all-time high.

Block trade in options market bets futures pass the 2011 record high

Bullion for delivery in February settled at $1,460.80 an ounce at 1:33 p.m. in New York. Futures for June 2021 delivery, which settled at $1,494.40 on Wednesday, will need to almost triple before expiration to make the call options profitable for its holder.

— With assistance by Michael Roschnotti