via INO.com - Gold Futures Prices

As we were saying months ago, when gold prices were showing a modest backwardation, the April contract, which is set to expire next week is higher than where it was at that time. It was also in backwardation, and the most heavily traded contract.

Tuesday was the EuroNext options expiry on derivatives, where there is a very large, market-dominating volatility smile derivative that has to be closed in the next few weeks.

The April contract was the most heavily traded, thus price action suggests that, despite the sell-off, people are awaiting delivery of this very contract. Sentiment has changed with regard to bullion as an investment since futures traders are now seeing the opportunity in this market.

Once we are past options expiry on gold derivatives, we still have the futures options expiry next week.

http://quotes.ino.com/charting/index.html?s=FOREX_XAUUSDO&t=&a=&w=&v=d3