New York: Gold option volatility surged to the highest in more than a year as investors have placed new bullish bets that prices will extend their recent rally to multi-month highs amid greater appetite for safe-haven assets and global economic concerns.

With prices briefly tapping the key psychological level of $1,200 per ounce on Monday, the buying has rekindled a relatively lacklustre options market, which has been rangebound for much of the past year.

The 90-day at-the-money implied volatility surged to 18.61 per cent on Wednesday, the highest since late January 2015, and up from around 16 per cent last Friday.

“The volume does seem to be coming from the buy side, which naturally raises volatility because the premium flow is into the long side of the options trade,” said one New York options broker.

“For the last 10 trading days, the upside longer-dated call buy interest has been the dominant feature.” The return of institutional interest had brought with it funds and other speculators, building greater liquidity in options this week, he said.

The surge in volatility, a gauge in options premiums and activity, was the biggest three-day jump since August.

The rally came as spot gold surged to $1,200.60 an ounce on Monday, a 7-1/2-month high, as sliding stock markets and worries over global economic growth prompted investors to seek safety.

Options give the investor the right, but not the obligation, to buy or sell at specified prices.