Gold, Silver Move Sharply Higher After Trichet Points To Debt Woes

Gold and silver ETFs are rising sharply after European Central Bank President Jean-Claude Trichet pointed to continuing downside risks Thursday in a news conference following the bank’s decision to keep rates low.

While expected to lower projections for euro zone growth in 2011, Trichet also addressed ongoing sovereign debt issues, saying that “some financing conditions have tightened.”

At least by some accounts, he also provided few clues about whether an actual rate cut was coming, which weighed on markets. The SPDR S&P 500 (SPY) is down 0.5% early Thursday.

Also, U.S. jobless claims rose slightly last week, still indicating weakness in the U.S. employment market.

The SPDR Gold ETF (GLD), which was already up in pre-markets by more than 1% before Trichet’s comments and the latest jobs report, is opening higher by 2.3%. Meanwhile, the iShares Silver Trust (SLV) is up nearly 2.2% in the early going.

President Obama will speak before Congress tonight at 7 p.m. eastern time and U.S. Fed Chair Ben Bernanke is scheduled to make a speech in Minnesota at 1:30 p.m.

The large-cap minded Market Vectors Gold Miners ETF (GDX) is going against the grain of broader equities markets. It’s up by 1.6% this morning. The Global X Silver Miners ETF (SIL) is moving in the same direction, up 1.1% so far.

The PowerShares U.S. Dollar ETF (UUP) is up 0.33%.

MF Global precious metals analyst Tom Pawlicki noted late yesterday that support for gold and silver is likely to come as big European banks are expected to increasingly warn that their earnings could suffer as a result of the euro zone debt crisis.

And tonight’s speech by President Obama “could be positive for gold prices if he unveils new stimulus measures which depend on fresh deficit spending,” the analyst wrote.

He added: “Although it’s unlikely that any such initiatives will be passed by the House, there are signs that agreement can be made on some infrastructure spending.”

Barclays cautioned that gold futures face key support at $1,700 an ounce. The firm’s analysts are also advising clients that as long as that level holds, however, “we look for gains through our initial target at $1,930 (moving toward) $1,970.”

They’re also looking for silver to move past the $44.23 an ounce peak with a floor of around $38.75 an ounce underpinning any downside activity.

Gold for December delivery is up $43 to $1,860.60 an ounce on the Comex. December silver, the most actively traded contract, is ahead by 77 cents at $42.41 an ounce.