Gold News & Info

Source: American Gold Exchange

Austin— Gold rebounded today as bargain hunters entered the market after yesterday's big sell-off. The dollar dropped while oil and equities gained in a mild return of risk appetite. Gold was also supported by more grim economic news out of the eurozone, including a new IMF report to the G20 declaring that "major downside risks" remain because of "fragile financial systems, high public deficits and debt." The deepening sovereign debt crisis in the EU remains a primary driver behind expectations of higher gold prices in coming years as investors seek protection from the possibility of financial chaos if nations default and leave the union. Silver rallied almost 3% while platinum and palladium also gained.

At the close: April gold gained $10.90 to $1,722.20; May silver added $1.02 to $35.66; April platinum rose $8.50 to $1,701.10; and June palladium gained $8.35 to $715 an ounce.

Only a day after optimism that Greece might be lifted from its death spiral by the ECB's 530 billion euro LTRO2, reality hit home with a new PMI report that Greek manufacturing shrank at its fastest rate in the 13-year history of the survey last month. With an unemployment rate at 21% in November (the latest data available), frozen credit markets, and devastating austerity measures mandated by the EU still to be enacted, Greece seems extremely unlikely to grow its way out of eventual default. The overall eurozone economy is expected to contract by half a percent this year, and unemployment is nearly 11%. Spain, also potentially moving toward default, has more than 23% unemployed. And compounding the pain, eurozone inflation rose unexpectedly to 2.7% in February. This kind of economic weakness heightens the probability of more loose monetary policies to come, adding to inflation risk and supporting higher gold prices.

Despite Chairman Bernanke's non-mention of QE3 in his testimony before Congress yesterday, which helped to trigger yesterday's gold sell-off, the U.S. economic picture is far from rosy. Home prices in the U.S. fell another 4% in December, reaching their lowest level since 2002. And foreclosure sales accounted for almost 25% of residential purchases last quarter. Manufacturing grew less than expect in February, with the ISM index registering 52.4 when below 50 means contraction. And personal spending adjusted for inflation retreated in the three months ending in January, according to the Commerce Department. With economic fundamentals like these brewing, one shouldn't count out another round of easing this year, despite Bernanke's gold-crashing silence yesterday.