Gold, Silver ETFs Hit Two-Month High; Buck Dives

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Gold and silver prices climbed to two-month highs Tuesday as the greenback tumbled against the euro amid speculation that the European Central Bank is on the verge of a Spanish and Italian bond-buying spree to cap their yields. However, the ECB issued statements yesterday trying to dispel those rumors.

"Bond-buying is seen as inflationary, and gold quickly reflects those inflation expectations," Mike Tarsala, a chartered market technician at Covestor, a New York-based asset management firm.

"Depending on the size of any stimulus program, it could be a tradable move for both gold and the dollar for several weeks, and possibly several months."

Here's an overview of the major moves in the precious metals and currency ETFs:

•SPDR Gold Shares ( GLD ): +1.07% to 158.95.

•Market Vectors Gold Miners ETF ( GDX ): +2.5% to 46.76.

•iShares Silver Trust : +1.97% to 28.50.

•Global X Silver Miners ETF ( SIL ): +3.60% to 20.73.

•PowerShares DB US Dollar Index Bullish ( UUP ): -0.75% to 22.48

•CurrencyShares Euro Trust ( FXE ): +1.08% to 124.07.

In the futures market, gold bullion climbed 1.13% to $1,640.60 an ounce. Silver surged 2.08% to $29.51 an ounce.

Gold has been trending lower since September 2011, when it peaked at $1,895 an ounce. It now trades 13% below that high. Although it's broken above its 50-day moving average, it's still trading below its 200-day line, which is bearish.

"Gold was depressed by Europe's liquidity crisis and the perceived threat that institutions and even central banks would sell gold to raise cash," said David Goldman, founder of MacroStrategy.com. "As the liquidity fears recede, gold slowly retraces to higher levels. But I don't see sufficient inflationary impulse to get us back to the $1,900 (an ounce) level soon."

Goldman projects gold will reach $1,700 an ounce (up 3.6% from Tuesday's price) by year's end, which translates to $170 a share for GLD.

GLD has been trading in a tight range between 148 and 159 for the past three months. SLV has been trading in a band between 25 and 29. A breakout from these ranges could ignite a new uptrend, says Bradford Cooke, CEO of Endeavor Silver Corp., a Vancouver-based gold and silver miner.

"The timing of this move is no surprise either, as we are just coming into the seasonally strong fundamental demand period for gold and silver starting in September and running until March," said Cooke.

"Given the severity of the debt crisis in Europe and the economic slowdown worldwide, I would not be surprised if some exogenous event comes up soon (like a Greek default, for example) that initially throws all markets for a loop but then prompts (Fed Chairman Ben) Bernanke and (German Chancellor Angela) Merkel to print money in order to refinance bad debts and stimulate sluggish economies," he added. "If and when that happens, it will simply accelerate the next move up in gold and silver."

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 The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: FXE , GDX , GLD , SIL , UUP

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