Gold Steady As Major Central Banks Set To Huddle
July 30, 2012
By James O'Dell
July 30, 2012, Los Angeles – Gold bullion prices had their biggest one-week rise in almost two months, after adding another 0.50 percent or $8.10 on Friday, to close at $1,623.30 an ounce, when data showed U.S. economic growth slowed to an annual rate of 1.5 percent in the second quarter from a revised 2 percent gain in the first quarter, as consumer spending slowed to its weakest pace in a year. The Silver price gained 0.87 percent or $0.24 to close at $27.73 an ounce, while the Gold/Silver ratio, the number of ounces of Silver it takes to buy one ounce of Gold, slipped to 58.54, as Silver outperformed Gold.
The Federal Open Market Committee (FOMC) meets this week on Tuesday and Wednesday amid investor hopes of additional economic stimulus. Gold bullion prices increased 70 percent between December 2008 and June 2011 during which time the Fed launched two rounds of quantitative easing (QE1 + QE2) that helped keep borrowing costs at record lows after buying $2.3 trillion of government debt.
The Wall Street Journal’s Jon Hilsenrath said on Friday that the latest GDP data “is ammunition for Fed officials who want to act right away to spur growth,” implying a rise in the risk of deflation. “What was also interesting in the GDP numbers was that we clearly saw slower consumer spending but higher inventory numbers,” said Cam Albright, of Wilmington Trust Investment Advisors. “The shelves are being stocked, but they’re not getting emptied.
In Europe, the European Central Bank (ECB), and the Bank of England (BoE), are also meeting this week, which makes 3 major central banks meeting within 24 hours of one another as they battle to gain control of their struggling economies. Investors are expecting the ECB to take action on Wednesday to support the euro following comments by ECB President Draghi on Thursday that policymakers will do whatever it takes to preserve the euro.
"His comments certainly suggest that ECB purchases of Spanish and Italian bonds are back on the table for discussion," said Chris Scicluna, of Daiwa Capital Markets Europe. 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.
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