Exchange traded funds that follow gold and silver prices continued their drive higher Thursday as the Eurozone debt crisis continued to dominate the news flow.
SPDR Gold Trust (NYSEArca: GLD) climbed 1.3% in early U.S. trading while iShares Silver Trust (NYSEArca: SLV) added 1.2%.
U.S. stock ETFs fell sharply in the global “risk-off” trade – the Dow slipped nearly 200 points. [Stock ETFs Pull Back]
“Despite a last minute compromise deal to head off a potential U.S. debt default, the gold price surged as weak U.S. GDP figures and a fall in the July manufacturing ISM increased speculation of a possible third round of quantitative easing later this year and firmed perceptions that low real interest rates will remain in place for the foreseeable future,” ETF Securities analysts wrote in a recent precious metals report.
“In addition Standard & Poor’s rating agency has indicated a U.S. debt downgrade is still possible and last week warned of a potential Spanish debt downgrade, indicating sovereign risk issues will remain key risks and interest in stores of value will remain strong on a medium-term basis,” they added.
In European stocks, ETFs tracking Spain and Italy suffered losses of about 4% in early U.S. trading Thursday. [Italy Feels the Heat; Spain Bond Auction]
SPDR Gold Shares
Full disclosure: Tom Lydon’s clients own SLV and GLD.
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