FxWirePro: Radar on precious metals and RV derivative trades

On the back dollar strength, gold futures were down 1.07% at $1,341.7 a troy ounce by 02:00 a.m. ET.

Gold vols skews should stay well supported and have room to widen striking 3M delta-hedged 25 delta riskies as a good value, positive vol carry risk off hedge.

Coming off a downbeat 2017, precious metals long vol trades started to make money in Q1 2018 (refer above chart). Safe haven assets vols were sharply higher on the back of the recent global vols rally that got an additional kicker from the full-blown equity markets panic that followed the Feb 2 hourly earnings print. Between the strong US CPI print and disappointing retail sales last Wednesday the markets seems to be getting a cue that the panic is over

Front-end Precious metals vols rebounded, at last. With a number of upcoming catalysts bound to keep realized vol tactically firm, XAGUSD strikes us as a solid defensive gamma hedge especially when paired in an RV with AUD in a delta-hedged XAG –AUD 25D put spread.

Buy 3M XAGUSD @ 18.6/19.25 vol vs sell AUDUSD @ 9.9 vol indicative 25 delta puts, in vega neutral notionals.

Currency Strength Index: FxWirePro's hourly USD spot index is inching towards 139 levels (which is highly bullish) while articulating (at 08:52 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.

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