Gold's Best Month Since 2008 Faces $202 Million Bearish Bet

Gold has risen 15 percent in August, its best month since 2008, even as one trader placed a $202 million bearish bet on the SPDR Gold Trust (GLD).

Twenty minutes after Monday's open, the trader sold nearly 116,000 in-the-money $420 calls expiring Sept. 18, collecting $202 million in premium, then bought the same number of $430 calls for $144 million, a $58 million net credit, according to a CNBC report.

The sale of in-the-money calls puts the breakeven near $425, below GLD's $427 price, making the structure a short-term bearish call spread. The broader options market stayed bullish, with traders buying more than 37,000 calls versus fewer than 20,000 puts, according to ThinkOrSwim data.

The trade lands before Wednesday's PCE inflation release and Thursday's Jackson Hole symposium, events that could swing gold. Spot gold touched $4,668 an ounce Tuesday before easing, while US futures rose above $4,700.

Smart Money Turns Cautious

Nigam Arora, founder of the Arora Report, said the probability is very high that gold sees a short-term pullback. Momentum-crowd flows remained very bullish while smart-money flows turned negative, he said, with GLD recording about $60 million of negative net money flow that day. SpotGamma data showed 13 of the top 15 most-active GLD contracts Monday were calls, while Cboe LiveVol data indicated volume ran near five times the 30-day average.

Macro Backdrop Still Supports Gold

The bullish case has not disappeared. ING commodities strategist Ewa Manthey said a weaker dollar, recovering ETF inflows, and US fiscal concerns continue to underpin gold, with clear upside risk to the bank's fourth-quarter target of $4,150 an ounce.

World Gold Council data shows global gold ETFs attracted $3 billion in inflows during July, with holdings rising 23 metric tons. Bloomberg-tracked funds added about 18 metric tons in a single day in August, the strongest one-day buying in nearly a year.

The rally has persisted even as 10-year Treasury yields hit multiyear highs and real interest rates jumped, conditions that typically pressure a non-yielding asset. Last week's Treasury move to expand buybacks of longer-dated securities revived concerns that policymakers may be unwilling to let long-term yields rise freely, deepening the dollar-debasement trade that has favored gold. Spot gold last traded above $4,700 in mid-May, and the metal stood near a three-month high.

This article is for informational purposes only and does not constitute investment advice.