Tuesday, June 7, 2011

Gold May Gain on Growth Outlook, European Debt, Survey Shows

From Bloomberg:

Gold may gain on speculation signs of slowing growth means the Federal Reserve won’t start tightening monetary policy soon and as Europe’s debt crisis boosts demand for a protection of wealth, a survey found.

Fifteen of 17 traders, investors and analysts surveyed by Bloomberg, or 88 percent, said bullion will rise next week. One predicted lower prices and one was neutral. Gold for August delivery was down 1.1 percent for this week at $1,520.60 an ounce by 11:31 a.m. yesterday on the Comex in New York. It reached a record of $1,577.40 on May 2.

Manufacturing in China, Europe and the U.S. slowed in May and a private report this week showing slower-than-forecast growth in jobs spurred concern that today’s Labor Department employment data will trail estimates. The Fed plans to complete a $600 billion bond purchase program, a second round of so- called quantitative easing, this month and keep interest rates “exceptionally low” for an “extended period.”

“The possibility of QE3 due to the slowing U.S. economy may propel gold to a new record,” said Mark O’Byrne, executive director of brokerage GoldCore Ltd. in Dublin. “The fundamentals are as sound as ever.”

Bullion climbed to an all-time high in British pounds this week and a record in euros last week as the euro region struggles to contain its sovereign debt crisis. European Central Bank President Jean-Claude Trichet said governments should consider setting up a regional finance ministry.....read on

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