VIX vs. Gold: Which is the better hedge today?

Gold – Double Top?

A sharp drop in gold below the 21-day moving average has been rare lately. The first support level is at $3200, followed by the 50-day average at $3140. Whether this is a “double top” formation remains to be seen, but the recent price action has confused many participants.

Gold simply doesn’t like a strong dollar. The chart shows gold versus the DXY (inverted dollar index).

Part of the logic behind holding long positions in gold is tied to the fact that net non-commercial participants were in “denial” throughout the entire 2025 market rally. Will they join in at all, or have they already abandoned gold in the long term?

CTA Funds in Gold

Exposure of CTA funds to gold.

Gold Volatility

Gold volatility has risen (though still far from panic-buying levels), but when comparing implied and realized volatility, we see that implied remains cheap, given how strong the market movement is.

Goldman Sachs supports the logic behind a 3-month, 20-day risk reversal strategy in gold, expressing the view via buying call options with a $3650 strike against selling put options with a $3150 strike. This is a synthetic long gold position. GS supports this idea with the following rationale:

“In an upward move – the high upside risk gives spot and volatility room for further growth, as seen several times in April. In a downturn – very low speculative positioning compared to last year, buying by Chinese insurance companies, and institutional demand from Asia would offer support if the price declines.”

There Are Cheaper Hedges

The VIX is a more attractive hedge than gold, despite the recent “failure” of gold as a hedge.