Precious metals ETFs opened sharply higher Tuesday on renewed weakness in the U.S. dollar and amid fresh indications that speculation in gold futures have hit new lows.
The iShares Silver ETF (SLV) is advancing by 3.8%. Meanwhile, the SPDR Gold ETF (GLD) is up 1.5%. Futures are also moving up: Gold for February delivery on the Comex is ahead by $26.60 at $1,637.50 an ounce; March silver is up $1.22 at $30 an ounce.
Net speculative length in Comex gold fell to a 12-month low at 436.6 tons in the week to Jan. 6, according to weekly data the Commodity Futures Trading Commission. That could be taken as a contrarian signal that market sentiment is close to a bottom, analysts pointed out. Also, the yellow metal has moved above its 200-day moving average at $1,635.50 an ounce, a key technical marker futures have struggled to overcome.
At current levels, GLD is also trading above its 200-day moving average at $158.55 a share. SLV still has a way to go to reach $35.25 a share, which appears to be its longer-term technical line-in-the-sand at this point. It’s within the shorter-term 50-day moving average, however, which currently rests at $30.70 a share. (SLV most recently was trading at $29.19 a share; GLD at 158.98 a share.)
The PowerShares U.S. Dollar ETF (UUP) is falling by 0.2% while the CurrencyShares Euro ETF (FXE) is rising by 0.2% on renewed optimism that European leaders will be able to complete an agreement calling for a tighter fiscal union by month’s end. Also, German Chancellor Angela Merkel and International Monetary Fund Managing Director Christine Lagarde scheduled a meeting this evening in Berlin to discuss stricter austerity measures for the euro zone.
Meanwhile, 2012 forecasts continued to trickle out. The Royal Bank of Scotland (RBS) Tuesday maintained its outlook for gold, forecasting the metal to average $1,750 an ounce this year.
“Following the end 2011 price slump, we have moved into the bullish gold camp,” Nick Moore, RBS head of commodities research, told Dow Jones Newswires on Tuesday. “We think that current levels near $1,600/oz are an attractive buying opportunity and expect investor inflows over the next few months to lead to higher prices.”
Miners are also advancing: The Market Vectors Gold Miners ETF (GDX) is starting the day up by 2.2% while the Global X Silver Miners ETF (SIL) is climbing by 2.9%.
