Gold Trading In Range While China Slows And The Fed Meets
March 13, 2012
By James O'Dell
March 13, 2012, Los Angeles – The price of Gold eased 0.79 percent or $13.60 to close at $1,699.50 an ounce on Monday, with Gold bullion prices trading in a range as China's trade sector posted its largest deficit in over a decade, at $31.5 billion for February, adding to investor concerns over a slowdown of the global economy. Silver slipped 1.98 percent or $0.68 to close at $33.59 an ounce, while the Gold/Silver ratio climbed to 50.60, as Silver under-performed Gold.
The U.S. budget deficit grew more than expected in February, as revenues declined. “The decline resulted primarily from an increase of $25 billion — or 47 percent — in refunds of individual income taxes,” said the Congressional Budget Office (CBO).The shortfall widened another 4.1 percent to $231.7 billion from a $222.5 billion deficit in February 2011, according to data released on Monday.
The Fed completes its two day FOMC meeting on Tuesday with investors focused on whether the Fed will feel the need for further monetary stimulus. Economists are saying the Fed meeting will be a quiet one, with officials making sure not to mention an early exit from the current easing policy. “They’ve learned that you can’t run to the doors too quickly,” said Steven Ricchiuto, of Mizuho Securities.
Meanwhile, in China, economists were expecting a trade deficit, after the $27.28 billion surplus generated in January, but it was the size of February’s deficit that alarmed analysts. “The deficit was four times the recent largest deficit and adds to fears of slowdown, leading the [People’s Bank of China] to weaken the yuan and lifting expectations of further near-term monetary easing as inflation has fallen back significantly,” said TD Securities analysts, in a note to clients.
In the eurozone, while Greece counts its new pile of freshly printed loot, the focus quickly shifts to both Portugal and Spain. After eurozone finance ministers approved Greece's second bailout on Monday, they quickly turned their focus on Spain, demanding tougher deficit targets for this year but also signaling that the new fiscal compact would retain some flexibility for hard hit economies. Don't leave your assets unprotected during these times of economic and geopolitical uncertainty, invest in physical Gold and Silver bullion and protect your wealth in 2012.
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