On the eve of the election, Goldman Sachs turns to gold options.
In the week leading up to the U.S. election, international gold prices have repeatedly hit historical highs during the day. Although there has been a pullback in the past two days due to the strengthening dollar, prices remain at historical highs.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ce77738d-74a5-4bd2-aaae-f88877cba821.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ce77738d-74a5-4bd2-aaae-f88877cba821.png"/>
Against this backdrop, Goldman Sachs' commodities trading department released a report on Monday stating that in response to Tuesday's election, the bank has converted its cash position in gold into options to hedge risks.
Goldman Sachs stated:
<blockquote>
&#34;This gives us the ability to buy at the lows of the election... because we are concerned about our current position.&#34;
&#34;It is no exaggeration to say that everyone we are in contact with is bullish on gold.&#34;
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b32cedfd-43da-4c10-9253-d1162a6f7f9c.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b32cedfd-43da-4c10-9253-d1162a6f7f9c.png"/>
</blockquote>
Goldman Sachs mentioned that it is currently positioning itself in the market primarily through the following methods:
<blockquote>
Using short-term leveraged structures to buy gold options. We are willing to pay a premium to potentially gain additional returns in the event of a &#34;contested result&#34; from the election (for example, a gold option with a strike price of $3,000 expiring in 2 months is currently priced at a 12% premium over the spot gold price of $2,753).
Utilizing 20% delta call option spreads with expirations of 3-6 months. We remain optimistic about the mid-term trend of the gold market and believe this option structure (buying a lower strike call option while selling a higher strike call option with the same expiration date) is more advantageous.
</blockquote>
Additionally, Goldman Sachs noted that last Friday was the first time in the past month they observed significant position unwinding, indicating a divergence in market views on gold.
The bank believes that the impact of the election results on gold can be interpreted in any possible way, but the only certainty is that if the election results are contested, gold prices will not rise.
Regarding the impact of different candidates winning, Goldman Sachs believes:
<blockquote>
Harris's election is theoretically bearish, but once &#34;bad news is priced in,&#34; the lows may be bought to support the mid-term trend.
Trump's fiscal policies are generally viewed as bullish by the market, but whether this view is based on concentrated market positioning remains to be seen.
</blockquote>
Overall, Goldman Sachs stated that the trend of the gold market cannot simply be reduced to the simple logic of &#34;heads I win, tails you lose,&#34; especially after gold has become one of the best-performing assets this year. Therefore, Goldman Sachs prefers to hold gold positions through options to maintain sufficient flexibility for operations when market positioning changes.
On the eve of the election, Goldman Sachs turns to gold options.
In the week leading up to the U.S. election, international gold prices have repeatedly hit historical highs during the day. Although there has been a pullback in the past two days due to the strengthening dollar, prices remain at historical highs
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ce77738d-74a5-4bd2-aaae-f88877cba821.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ce77738d-74a5-4bd2-aaae-f88877cba821.png"/>
Against this backdrop, Goldman Sachs' commodities trading department released a report on Monday stating that in response to Tuesday's election, the bank has converted its cash position in gold into options to hedge risks.
Goldman Sachs stated:
<blockquote>
&#34;This way we have the ability to buy at the lows of the election... because we are concerned about our current positions.&#34;
&#34;It is no exaggeration to say that everyone we are in contact with is bullish on gold.&#34;
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b32cedfd-43da-4c10-9253-d1162a6f7f9c.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b32cedfd-43da-4c10-9253-d1162a6f7f9c.png"/>
</blockquote>
Goldman Sachs claims it is currently positioning itself in the market mainly through the following methods:
<blockquote>
Buying gold options using short-term leveraged structures. We are willing to pay a premium to potentially gain additional returns in the event of a &#34;contested result&#34; from the election (for example, a gold option with a strike price of $3,000 expiring in 2 months is currently priced at a 12% premium over the spot gold price of $2,753).
Utilizing 20% delta call option spreads with expirations of 3-6 months. We remain optimistic about the medium-term trend in the gold market and believe this option structure (i.e., buying lower strike call options while selling higher strike call options with the same expiration date) is more advantageous.
</blockquote>
Additionally, Goldman Sachs mentioned that last Friday was the first time in the past month they observed significant position unwinding, indicating a divergence in market views on gold.
The bank believes that the impact of the election results on gold can be interpreted in any possible way, but one thing is certain: if the election results are contested, gold prices will not rise.
Regarding the impact of different candidates winning, Goldman Sachs believes:
<blockquote>
Harris's election is theoretically bearish, but once &#34;bad news is priced in,&#34; the lows may be bought to support the medium-term trend.
Trump's fiscal policies are generally viewed as bullish by the market, but whether this view is based on concentrated market positioning remains to be seen.
</blockquote>
Overall, Goldman Sachs stated that the trend in the gold market cannot simply be reduced to the simplistic logic of &#34;heads I win, tails you lose,&#34; especially after gold has become one of the best-performing assets this year. Therefore, Goldman Sachs prefers to hold gold positions through options to maintain sufficient flexibility for operations when market positioning changes

GLDM

517520

Goldman Sachs believes that it is no exaggeration to say, "Everyone we have spoken to is bullish on gold," and therefore has reduced the risk of gold positions, "preferring to hold long positions through options, so there is enough ammunition to buy on dips."

- Ahead of the U.S. elections, Goldman Sachs has shifted its gold positions to options to hedge risks, as gold prices reached historic highs despite recent dollar strength.  
- The firm noted a significant market interest in gold, with strategies including short-term leveraged options and a preference for a specific options structure to capitalize on potential volatility from the election results.  
- Goldman Sachs believes that the impact of the election on gold prices is complex, emphasizing flexibility in their approach due to the uncertain nature of the outcomes.

Wallstreetcn

On the eve of the election, Goldman Sachs suddenly made a significant adjustment to its "long gold" trade