Gold News & Info

Source: American Gold Exchange

Austin— Gold slipped 0.5% and silver fell 2.7% as more bad economic data out of China and Europe put the global recovery into question. Chinese manufacturing slowed sharply to a four-month low on dismal domestic consumption and reduced demand for exports. And weaker-than-expected PMI readings in France and Germany show the eurozone economy to be contracting. Equities and other risk assets fell decisively, and the U.S. dollar and Treasury bonds gained on safe haven inflows. Platinum lost 1.7% while palladium plummeted 5.5% on reduced prospects for use by China in automobile catalytic converters.

At the close: April gold lost $7.80 to $1,642.50; May silver dropped 88 cents to $31.35; April platinum lost $28.30 to $1,612.10; and June palladium was down $37.60 to $651.05 an ounce.

Gold's loss today, though mild in itself, underscores its current correlation with risk assets that are beginning to lose some allure. Today's close was gold's lowest since mid-January, and if recessionary data keeps piling up it might weaken further in the short-term. Still, gold should be well-supported this year by growing inflationary pressures at home and abroad, brought on by rising fuel costs and the effects of global monetary easing. More easing is expected out of China, with a key state-run newspaper calling for a reduction in interest rates. And Aneta Markowska of Societe Generale today joined a growing list of important economists who think the Fed will announce QE3 by April. Last week, Jan Hatzius, chief U.S. economist at Goldman Sachs and Mohamed El-Erian, chairman of investment giant Pimco said the same thing. And the eurozone's sovereign debt problems, as we discussed yesterday, are far from over and should add to safe-haven demand later this year. So, even if it slips further, gold is very unlikely to stay down for long.