Gold Dips On Greece Debt Deal -- Experts Say Buy Now


Shutterstock photo

Gold prices weakened Tuesday as the dollar rose on news that Greece struck a deal with global lenders to reduce its debt and get more loans to keep the country on life support.

Spot gold prices slipped 0.42% to $1,743.00 an ounce.SPDR Gold Shares ( GLD ), tracking a 10th of an ounce of bullion, fell 0.39% to 168.77 a share. It appears to be consolidating along its key 50-day moving average, which is bullish. It's added 1.19% so far this month.

"Gold appears to be setting up another up thrust in the short-term," Waverly Advisors of Corning, N.Y., wrote in a client note Tuesday. The firm recommends setting a stop loss at $1,708 a share on bullion, which translates to about $170.80 a share for GLD.

The latest resolutions to the Greek debt crisis involves taking on more debt, loosening deficit limits, lowering interest rates and central banks losing profits on their loans, which pressure currency values, the firm stated.

"Inclusive of a bond buyback, the total notional amount extended in December will exceed 34 billion euros," Waverly wrote.

Meanwhile, the Organization for Economic Cooperation and Development forecast the European Union's economy will contract 1.4% in 2013. The OECD's report called for more easing from the European Central Bank.

Ed Carlson, a chartered market technician and founder of Seattle Technical Advisors, recommended in a note released Monday that his clients buy gold on pullbacks between now and the second week of December. His technical indicators suggest "gold broke out of a two-week congestion zone on Friday." But he noted that gold equities' weakness relative to the S&P 500 fails to confirm the yellow metal's strength.

Market Vectors Gold Miners ETF ( GDX ) slipped 1.50% to 48.02. It regained its 200-day moving average after breaking below it two weeks ago. But trading volume has been very thin on the rebound, questioning the rebound's strength. GDX has underperformed the market recently. It lost 9.57% so far this month, whileSPDR S&P 500 ( SPY ) shed a mere 0.54%.

Commodity sector mutual funds took in $1.7 billion -- the most since Q2 of 2011 -- during the week ended Nov. 21. That's in stark contrast to equity funds, which saw outflow of $7.74 billion, according to EPFR Global. Gold and precious metals accounted for only a quarter of the total inflow into commodity funds. Bond funds attracted $4.97 billion.

PowerShares DB U.S. Dollar Index Bullish ( UUP ), measuring the greenback against a basket of major foreign currencies, added 0.25% to 22.00 in low volume, mostly because of euro weakness. It appears to have found support at its 50-day line. But its 50-day line has formed a bearish black cross by crossing below the longer-term 200-day moving average, which is very bearish.

Silver Prices Hold Strong

Silver futures gave back 0.50% to $34.11 an ounce.

IShares Silver Trust ( SLV ) eased 0.27% to 32.92. It's holding firm above the 50-day moving average, which is very bullish. It's climbed 5.24% month to date.

Global X Silver Miners ETF (SIL) dropped 0.73% to 23.00. It's consolidating below the 50-day line but above the 200-day line. Its long-term direction remains up, but the short-term looks trendless. It's fallen 9.17% so far in November.

Follow Trang Ho on Twitter @TrangHoETFs .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing ETFs
Referenced Stocks: GDX , GLD , SLV , SPY , UUP

More from Investor's Business Daily


Investor's Business Daily

Investor's Business Daily

Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by