“Spain’s credit downgrade last week again raised gold’s safe-haven appeal, but the consequent U.S. dollar strength weighed on gold demand,” Arnold and Brooks wrote. “U.S. dollar strength is likely to continue to act as a weight on the gold price in the near-term, while the flood of central bank liquidity stimulus, concerns about pipeline inflation and ultra-low interest rates should remain structurally supportive.” [Watch Dollar ETF for Next Moves in Gold]
They noted one bullish factor for gold is central bank buying, particularly in emerging markets.
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Full disclosure: Tom Lydon’s clients own GLD and SLV.