Exchange traded funds (ETFs) opened strong on Wall Street Wednesday as gold rallied to a new high and Treasury prices slipped.
- Gold futures rallied above $1,460 an ounce to a new intraday record and silver prices hit a 31-year high Wednesday, as investors flocked to the safe haven of precious metals. Gold for June delivery rose $6.90 to $1,459.40 an ounce in electronic trading on Globex. “The current climate is still favorable for precious metals,” said Commerzbank analysts. “Continued unrest in North Africa and in the Arab world and the debt crisis in euro-zone peripherals, coupled with the weak U.S. dollar and still loose monetary policy of western central banks, are fuelling price speculation,” they wrote in a note. The Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) is up over 1% early Tuesday.
- European stock markets rose on Wednesday as investors in London focused on Britain’s retail and manufacturing sectors on the eve of interest rate decisions from the Bank of England and ECB. In late morning trade, London’s benchmark FTSE 100 index climbed 0.54 percent to 6,039.66 points, Frankfurt’s DAX 30 gained 0.64 percent to 7,221.43 points and in Paris the CAC 40 edged up 0.05 percent to 4,043.98. Financial markets around the world were meanwhile braced for a European Central Bank interest rate hike Thursday, the first since July 2008, but wondered how it could effect struggling peripheral Euro zone economies. Analysts were also speculating on how big an increase the ECB might unveil, and whether it would be the first of a series that could extend into 2012. The iShares MSCI United Kingdom Index ETF (NYSEArca: EWU) climbed almost 1% in early trading.
- Treasury prices slipped on Wednesday, sending 10-year yields toward the highest in a month, with a lack of economic data leaving traders to focus on an all-but-impending interest-rate hike in Europe and on the looming possibility of a U.S. government shutdown. Yields on 10-year notes, which move inversely to prices, rose 3 basis points to 3.52%, the highest since early March. A basis point is 1/100th of a percent. “The issues around the 2011 deficit could start to weigh on the market psyche in the day ahead,” said George Goncalves, bond strategist at Nomura Securities. “Given the fast-approaching deadline, this could become a more salient concern.” The iShares Barclays Short Term Treasury Bond ETF (NYSEArca: SHV) is up slightly in early trading.
Gregory A. Clay contributed to this article.
For full disclosure, Tom Lydon’s clients own GDXJ.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.