Gold exchange traded funds were rising Thursday amid speculation Greece’s prime minster may step down and after a surprise rate cut from the European Central Bank.
The ECB lowered the benchmark rate to 1.25% from 1.5%. [ECB Rate Cut]
ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) added 1% in early trading Thursday.
Analysts are forecasting that gold will rebound from its biggest monthly plunge since the market meltdown in 2008, and could reach a new record by the end of the first quarter of next year.
As economic expansion is stagnating in both developed and emerging markets, and Europe’s debt crisis remains dangerous, the precious metal has reason to be favored. [Gold ETFs Retrace Losses After Bulls Hold $1,600 an Ounce]
“There is a loss of trust in the entire financial system, and urgent need for safe-haven investing,” Ronald Stoeferle at Erste Group Bank AG in Vienna, said on FP Investing. “The environment for gold is just perfect.”
According to estimates compiled by Bloomberg, futures in New York may rise 12% to $1,950 per ounce by the end of the first quarter, 2012. Gold has risen 22% in 2011, which beat the S&P GSCI Commodity Index that gained 2.2% this year, reports Debarati Roy for FP Investing.
This week, investors are sending gold prices up after Greek Prime Minister George Papandreou’s announcement he will put the bailout to a vote. On Thursday, there were reports Papandreou was planning to step down.
ETFS Physical Swiss Gold Shares
Tisha Guerrero contributed to this article.