Gold exchange traded funds rallied about 1% on Tuesday to within range of their record highs after the minutes from the latest Federal Reserve meeting revealed some members would be open to “additional monetary policy accommodation” if the economy stalls.

Also Tuesday afternoon, Moody’s cut Ireland’s debt rating into “junk” territory.

The $7.3 billion iShares Gold Trust (NYSEArca: IAU) was up 1% in the final hour of U.S. trading. David Chojnacki, market technician at Street One, said the gold ETF has been trading in a 5% range for nearly 10 weeks, but has been showing short-term strength recently. [Gold ETFs Rise]

“Volume has also increased in the last several sessions, when volume in the rest of the market has been weak,” Chojnacki said. “The global debt crisis may be the perfect fundamental catalyst to move the gold ETF out of its trading range and provide a profitable breakout trade.”

Moody’s downgraded Ireland on Tuesday after last week cutting its rating on Portugal to non-investment grade. Growing concerns over Italy’s fiscal accounts are “driving the gold price up and the euro down” amid the safety trade, wrote Daniel Wills and Nicholas Brooks at ETF Securities in a weekly report.

“Concerns that Greece may also be allowed some form of debt default appeared to add to investor fears,” the analysts said. “Much worse than expected U.S. payrolls growth helped anchor expectations of low U.S. interest rates for the foreseeable future, providing another boost to the gold price.”

Gold prices jumped Tuesday after the release of the Fed minutes. “Some participants noted that if economic growth remained too slow to make satisfactory progress toward reducing the unemployment rate and if inflation returned to relatively low levels after the effects of recent transitory shocks dissipated, it would be appropriate to provide additional monetary policy accommodation,” according to the minutes. [Third Quarter Outlook: Life After QE]

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