Gold exchange traded funds have corrected the past two months along with the precious metal, which fell to about $1,600 an ounce following a record-breaking run above $1,900.

The metal ETFs have stabilized the past couple weeks after the sharp decline that coincided with a rally in the U.S. dollar. Investors are trying to figure out which direction gold ETFs will break next.

Precious metals ETFs were quiet Friday after the Labor Department said September nonfarm payrolls rose more than expected. [ETFs React to Jobs Report]

Concern over a possible default for Greece and a slump in the global economy have pushed investors into safe havens such as gold ETFs.

Analysts still believe that the upside potential for gold prices is strong. The fact that gold prices have held steady despite the recent correction over the past month is proof  that investors would rather hold gold in their portfolios than U.S. dollars, says Ron Rowland for ETF Daily News. [Gold ETFs Slightly Lower as Markets Eye Bernanke]

“Do not get caught in the exuberance or the pessimism of short-term movements even is they are sharp,” Peter Schiff, CEO of Euro Pacific Precious Metals, wrote in a client note this week. “Observe the fundamentals: the events in Europe, the looming budget calamity in the U.S., central bankers steadfast strategy of debasement, and merging markets’ continued diversification into precious metals. These are the main drivers for gold’s long-term appreciation.” [Basic Materials ETFs Lag on Economic Woes]

Factors could put pressure on gold prices would be increased market confidence and the removal of inflationary pressure which would be provoked with the increase of money supply in the economy. Neither of these factors are on the horizon at the moment, as the fate of the Eurozone is still weighing on the global economy.[Gold ETFs Rise on Greek Default Worries]

Showing Page 1 of 2