Gold ETFs in Three-Day Tailspin as $1,600 Breached

May 9th at 9:59am by John Spence

Gold ETFs and other precious metals were down sharply for the third straight session on Wednesday as bullion slipped below $1,600 an ounce.

SPDR Gold Shares (NYSEArca: GLD) was down 1.3% at the open and iShares Silver Trust (NYSEArca: SLV) fell 2%.

The metals ETFs have been hit by the latest outbreak in Europe’s debt crisis, which has sent the U.S. dollar higher. PowerShares DB US Dollar Index Bullish (NYSEArca: UUP) is on a seven-day winning streak. [Precious Metal, Miner ETFs Fall in Risk-Off Trade]

The ETF tracks the movement of the greenback against a basket of currencies. The rally has carried the currency fund above its 50-day and 200-day simple moving averages.

“We expect the downtrend to be continued as the failure to shape a Greek government stirs up anxiety about the future of the Eurozone,” Karvy Comtrade analysts said in a Bloomberg News report. “The euro is therefore likely to remain under pressure.” CurrencyShares Euro Trust (NYSEArca: FXE) declined 0.6% in early U.S. trading Wednesday.

The gold ETF is holding a slim gain for 2012 after trending lower since March with the decline picking up speed the past week.

SPDR Gold Shares

PowerShares DB US Dollar Index Bullish

Full disclosure: Tom Lydon’s clients own GLD and SLV.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.