Precious Metals ETFs finish week in red as the fiscal cliff approaches and Europe enters a recession
Precious metals ETFs, including gold ETFs and silver ETFs, have finished the week in red, as investors continue to be spooked by the rapidly approaching fiscal cliff and European recession. Precious Metals ETFs have been following equity market down trends recently, and do not appear to be letting up anytime soon in bearish sentiment.
Naturally, fears regarding the upcoming fiscal cliff and current, newly classified European recession have spooked investors into “risk off” trading with both equities and precious metals ETFs. Precious metals ETFs typically respond however to currency movements, such as a weaker or stronger US Dollar or Euro. If the United States does indeed drop off the fiscal cliff (which would most likely wreck the US Dollar AND equity prices), gold and silver ETFs might experience a huge increase in price, as investors flee for the “safety” of gold and silver. The same goes for Europe and its new recession; if a country default (think Greek) happens or the Euro continues to decline, gold and silver prices will likely rise as well.
A chart below of the SPDR Gold Trust ETF (NSYEARCA:GLD) illustrates the overall precious metal ETF decline in recent weeks:
chart courtesy of Stockcharts.com
By looking at the chart above, one can see that NYSEARCA:GLD is on a negative trend but has had a hard time breaking through its 50 Day Moving Average. With a weekly RSI of 50.3, this gold ETF, although negative, is trying to decipher which direction to go given the current situation. As mentioned earlier, a gold ETF or silver ETF break from equity trends will likely happen if the US “fiscal cliffs” itself or if the Euro really does go into demise. For now, it appears that gold investors are looking for longer term answers in order to break through the tough 50 Day Moving Average of support or mount a new bullish trend.
Below is a weekly update of the top precious metals ETFs in the United States:
Weekly Gold ETF Update:
Gold Spot Price: $1713.30/oz, -.99%