Urban studies: Doing research when every city is different 
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Gold’s 1-month ATM vol spiked from 8.5 vols to 10 vols in the middle of the week only to fall back to 9 vols again as spot prices fell sharply on Friday following the strong US jobs report. Positively skewed IVs have been stretched on either side, we could see bids for both OTM call and OTM put strikes. We think this is a good opportunity to sell 1M ATM vol that has recently seen a spike in its sell vol signal. The sell signal strength spiked on Tuesday to a level that is above the 95%-tile of its range and has stayed there consistently throughout the week.
We would also consider selling 3M ATM vol instead due to the fact that the 3M ATM vol level is 15% higher in vol terms than the 1M ATM vol level, which is a fairly high spread level historically. At our current prices, we recommend selling 3M ATM vol at 9.9 vols or selling 1M ATM vol at 8.8 vols, indicatively.
While Gold and Palladium are already far into an internal 3rd wave rally of greater scale, we see great catch-up potential for Silver and Platinum, which are still in the very early stages of it. In line we see the Gold/Silver spread trading significantly lower.
What is more eye-catching is the 2019 gamma outperformance, in our view. Bucking the long-term strongly negative trend, 3M delta-hedged straddles are up 1.6vols YTD. Theta friendly long gamma / short vega calendars were particularly efficient in exploiting the gamma performance.
Amid festive season, XAUUSD Strangle Shorts appear to be suitable. Contemplating the major trend that has been range-bounded (oscillating between 1,550 and 1,445 levels), it is wise to deploy (0.5%) out-of-the-money call and (0.5%) out-of-the-money put options of 2w tenor. The strategy can be executed at the net credit and certain yields would be derived in the form of initial premium received as long as the underlying spot FX remains between OTM strikes on the expiration.
Alternatively, we advocated buying delta-hedged 1Y XAUUSD 1*2 ATM/25D strikes ratio call spread @12.2ch vs 15.25/16.25indic, vega notionals, spot reference: $1,503 levels). Courtesy: Sentry & JPM
