Gold exchange traded funds rose 1% on Wednesday as futures contracts closed near $1,530 an ounce. Investors bought precious metals after Portugal’s sovereign debt was hacked down to “junk” by Moody’s.
Investors remain concerned over the financial prospects of weaker Eurozone states, such as Spain, Ireland and Italy. [Gold ETFs Rally on Eurozone Debt Fears; Euro Dives.]
The rally in gold prices Wednesday lifted the largest metals ETF by assets over its 50-day moving average.
“Moody’s gave the markets a painful reminder yesterday that the debt crisis in the peripheral eurozone countries is far from over when it lowered Portugal’s credit rating four notches to Ba2,” said broker Commerzbank in a FastMarkets.com report. [Gold and Silver ETFs Rally as Moody’s Warns on China, Portugal]
“Europe’s sovereign debt problems are clearly not unique in their positive impact on gold either,” broker UBS commented. “An increasing focus on U.S. fiscal worries should also lead to safe-haven and diversification bids, particularly if there is heightened concern about the U.S. rating being put on review for a possible downgrade and investors start questioning government debt altogether.”