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OPTIONS traders are boosting bullish wagers on gold to an almost four-year high, betting US Federal Reserve chairman Ben Bernanke will hint at additional stimulus measures at the Jackson Hole symposium in Wyoming this weekend.
The ratio of outstanding calls to buy the SPDR Gold Trust versus puts to sell jumped to 2.69-to-1 on August 24 and reached 2.76 earlier this month, the highest level since October 2008, according to data compiled by Bloomberg.
The exchange-traded fund has risen 3.7pc this year to $161.64 (€129) amid increased demand for the metal as a hedge against inflation.
The biggest drop in US consumer confidence in 10 months and a slowing economic expansion are helping fuel speculation that the Fed will step up measures to stimulate growth.
Testimony
Mr Bernanke's speech at the 2010 Jackson Hole conference set the stage for a second round of large-scale asset purchases, which helped drive the Standard & Poor's 500 Index to rally 26pc through the end of June 2011.
"There's an extremely high likelihood of another announcement of quantitative easing in the next Fed meeting, with the most likely scenario being that Bernanke will take one step further in his Jackson Hole, Wyoming, testimony," said Jeffrey Sica who helps oversee more than $1bn of assets.
"Gold has taken on a more serious tone as of late because of not only our central bank, but central banks around the world, creating liquidity to stimulate economic growth."
Mr Bernanke is set to deliver a speech on monetary policy to central bankers and economists tomorrow at the Kansas City Fed's symposium in Jackson Hole.
