ETF Trends
ETF Trends

Gold exchange traded funds were set to open the week with a 2% rise on reports of a banking sector recapitalization in Europe, while the euro strengthened against the U.S. dollar.

SDPR Gold Shares (NYSEArca: GLD) was up 2% in preopen trade Monday. German Chancellor Angela Merkel and French President Nicolas Sarkozy will submit a plan to recapitalize European banks and address the debt crisis in Greece by the Nov. 3 Group of 20 summit, Bloomberg reported.

Gold prices finished last week with a slight gain and stocks rallied on hopes leaders in Europe will take the necessary steps to deal with the sovereign debt crisis.

In currency ETFs, CurrencyShares Euro Trust (NYSEArca: FXE) vaulted 1.7% in Monday’s premarket following the pledge from France and Germany over the weekend. The dollar weakened and investors bid crude higher – U.S. Oil Fund (NYSEArca: USO) rose 2.5%.

Gold ETFs have consolidated after their big correction in September. [What Next for Gold ETFs After Pullback?]

The precious metal funds have been volatile but that hasn’t shaken the confidence of long-term gold bulls. [Gold Bulls Undaunted]

“People are thinking the newsflow is only beneficial in the short term. Europe still has to get its act together on a much longer-term basis,” said Credit Agricole analyst Robin Bhar in a Reuters report.

“While a detailed plan was lacking, we view any progress on bank recapitalization as a positive for gold,” added UBS in the article. “Typically liquidity concerns and funding issues are not gold’s friends.”

SPDR Gold Shares

Full disclosure: Tom Lydon’s clients own GLD.

Read the disclaimer; Tom Lydon is a board member of the funds for Rydex|SGI.

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.