It’s early, but already we’ve seen two big swings in the price of the SPDR Gold Trust (GLD).
After edging up, the popular ETF dropped more than 1% only to climb 0.8% before giving back those gains. As the market struggles to find direction, GLD was down 0.5% most recently while the iShares Silver Trust (SLV) was sliding by 3%.
Miners are following broader stock markets down. The Market Vectors Gold Miners ETF (GDX) is off by 0.1% while the Global X Silver Miners ETF (SIL) is down 0.8% so far.
The PowerShares U.S. Dollar Index (UUP) was recently trading flat to slightly lower after falling earlier as the euro rose on reports that the a review team from the troika of Greece’s international lenders — the European Union, the European Central Bank and International Monetary Fund — will return to Greece Thursday.
In futures, gold for December delivery is trading lower by $8.70 at $1,643.80 an ounce on the Comex. December silver is down 52 cents at $31.02 an ounce.
On Wednesday, traders watch as euro zone members continue to weigh in regarding measures to broaden the powers of Europe’s rescue fund to help support flagging banks. Finland approved the measures in a parliamentary vote today, but the big vote is scheduled for Thursday when Germany is due to make its intentions known.
“A lot of traders are just concerned that nobody is going to come up with a good solution (for Europe’s debt problems),” Rob Kurzatkowski, senior commodity analyst with optionsXpress, told Dow Jones Newswires. “The recent selloff was excessive, but at the same time we’re not seeing a mad rush of people coming in to buy either.”
Uncertainty is likely a main culprit in silver’s slip. The fear is that an economic slowdown in Europe would curb demand for silver in everything from chemical production to high-end electronics.
But reports indicate that retail investors are still flocking to buy the gray metal at bargain prices. Barcalys estimates that in the past two days, physical silver held by ETFs has jumped by 195 metric tons. By contrast, some 95 metric tons were redeemed.
“Given the silver market remains in a fundamental surplus, the upside continues to rest with investor interest,” Barclays wrote in a note to clients.
Also, Commerzbank analysts pointed to reports that falling prices are spurring increased demand in parts of emerging markets, particularly India.
The bank’s analysts added that they see European central bankers raising their gold holdings. “The price of gold should be well supported on this front in the medium- to long-term,” Commerzbank wrote.
Considering how quickly conditions have changed in the marketplace, MF Global’s Edward Meir this morning noted that it’s not surprising metals traders are taking a pause. ”If investors get a sense that things are dragging, the decline could easily resume,” he wrote.
But in reviewing the technical make-up of the market, economist Dennis Gartman said it’s clear the worst of the recent sell-off is over.
