By Ben Cross
Now that investors have had the weekend to digest the Brexit result, it seems there is even more uncertainty than in the immediate aftermath. The risk-off trading environment has benefited one asset: gold. The precious metal has pulled back from its highs of Friday and Monday, but it's still trading significantly higher than its levels before the Brexit results were announced.
Gold usually benefits from political or economic uncertainty, but historically the metal does not hold onto those rallies. The recent rally could be very different as the actual outcome may not be seen for some time but worries about that outcome are going to keep "tail risk" trades in vogue for professionals.
Let's assume that gold is going to grind higher over the next month. This is based on the recognition that Brexit is not a "Black Swan" event but will take time to sort out. Based on that assumption, here's a trade for someone who is bullish and has no position in the metal. (These are using options on gold futures that trade at the Comex.)