ETF Daily Roundup: GLD Tanks On Gold’s Weakness, UNG Crashes On Stockpiles

by on December 14, 2011 | ETFs Mentioned:

Today was another dismal trading session as euro fears continued to plague markets. The Dow lost over 130 points while the NASDAQ and S&P 500 lost 1.6% and 1.1% respectively. Though many were hoping for a “Santa rally” to close out the year, markets have been riddled with instability as the last few weeks have been focused on the progress, or lack thereof, of the euro zone. Today saw the EUR/USD rate fall below $1.3 for the first time in recent memory, sparking a sell-off that only intensified as the day came to a close [see also 12 High-Yielding Commodities For 2012]. 

Perhaps the biggest stories on the day came from gold and oil, which turned in terrible performances. Gold lost $85/ounce, or 5.1%, as its price dipped below $1,600, leading many to call the long bull movement in the precious metal to be sputtering out. Oil featured identical losses of 5.1% as fears of the euro zone and overall lack of investor confidence brought crude well below the $100 mark. With today’s markets performing quite terribly, we outline two of the worst ETF performers on the day to keep investors up to date on how some of their favorite assets have been behaving [see also When Structure Matters: ETF, ETN, Or Other?].

One of the biggest ETF losers on the day was the SPDR Gold Trust (GLD) which surrendered over 3.5% of its price. Gold’s skid began on the day with investors fleeing for cash as the euro drop signaled global anxiety about the progress of our economies, but the day only got worse from there. “The decline blew the yellow metal past some long-held technical levels, which then exacerbated the selloff” writes Laura Mandaro. One of those technical levels was its 200 day moving average, which the commodity hasn’t crossed since January of 2009, striking fear in investors that gold’s hayday may have finally passed. GLD has an ADV of about 12 million, but the fund traded over 42 million shares on the day [see also Three Reasons Why Gold Is Overvalued].

Another one of the biggest ETF losers on the day was the United States Natural Gas Fund LP (UNG) which sank by 4%; a big loss even by UNG’s standards. The losses stemmed from more stockpile problems which have been a major thorn in this commodity’s side over the past few weeks. Temperatures across the country are still above the historical average and are crushing natural gas demand/usage which consequently slaughters prices. Analysts predicted tomorrow’s EIA inventory report will see stockpiles drop “90 billion cubic feet, or 2.3 percent, to 3.741 trillion cubic feet in the week ended Dec. 9″ writes Gene Laverty. The drop is still well below average as demand for areas like the Northeast trailed its historical average by 29% in the last week. Until weather cools off, expect UNG to continue its slide [see also Two Commodity Producer ETFs To Liquidate].

Disclosure: No positions at time of writing.