ETF Trends
ETF Trends

Further signs of an economic recovery are boosting ETFs that track “cyclical” precious metals.

There were a number of positive data releases last week. Chinese export numbers added to evidence that  China’s economy is recovering; the ECB was cautiously optimistic about an economic recovery in the euro area in 2013 and a range of significant new stimulus measures were announced by Japan.

Cyclical precious metals such as silver, platinum and palladium benefiting from the improved macro backdrop. The gold price also rose as the US dollar weakened and investor sentiment improved.

Improving China data help drive cyclical precious metals higher

Chinese exports are reported to have risen by 14% in December 2012, surpassing consensus expectations of only a 5% rise. [ETFs for China’s Domestic Rebound]

This data release added to evidence that China’s economy may be rebounding and lifted the outlook for China’s demand for cyclical precious metals. Silver, platinum and palladium ended the week 5%, 4% and 1% higher respectively.

Rate cuts less likely as the ECB expects an economic recovery in 2013

The ECB’s Governing Council unanimously decided to hold rates at last week’s policy meeting. [Euro ETF Jumps After ECB Stands Pat on Rates]

The ECB expects the current low interest rates, improving financial market confidence and strengthening global demand to drive a recovery, but cautioned that to sustain the improvement in confidence governments must stay the course on structural reform and fiscal consolidation.

The euro strengthened on the news, driving dollar lower and pushed precious metal prices higher.

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