Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dropped by 1.1% as another round of solid U.S. economic data offset the failure by Congress to prevent sequestration, the recovery-damaging cuts in government spending due to be triggered at midnight. Jobless claims declined by more than forecast last week and GDP was revised slightly higher last quarter, showing 0.1% expansion rather than contraction, as had been originally reported. Business activity increased in February to its highest level in almost a year as manufacturing, which comprises 12% of the economy, appeared to regain its footing. And consumer comfort rose to its highest point this year as gains in stocks and housing increased household wealth. The dollar rose on the upbeat reports, pressuring the entire precious metals complex. Silver fell 1.9%, platinum 1%, and palladium 1.5%.

At the Comex close: April gold dropped $17.60 to $1,578.10; May silver fell 55 cents to $28.43; April platinum lost $16.60 to $1,583.50; and June palladium slid $11.10 to $734.55 an ounce.

While most American investors seem nonplussed about the imminent sequester, the IMF warned today that it will slash its 2013 growth forecast for the U.S. by 25% if the spending reductions occur as scheduled. The $85 billion in cuts for this fiscal year alone are expected to cost upwards to 750,000 jobs, according to the Congressional Budget Office.

In supportive news for gold, India will not raise its import tax on gold again. Since January 2012, the tax tripled from 2% to 6% in an effort to curb the nation's exploding current-accounts deficit. Another 2% tax increase was widely expected but the government refrained under pressure from various trade groups. Gold imports by the world's largest gold consumer fell by 11% last year, largely because higher taxes made the metal too expensive. With prices coming down and taxes stabilizing, analysts believe Indian demand will rebound this year.