Weak Economic News Boosts Gold Price
August 15, 2012
By James O'Dell
Los Angeles, CA. – Morgan Gold - Gold bullion prices were lifted on Wednesday and are currently trading at $1,603.10 an ounce, with Silver at $27.85 an ounce, after a report by the New York Fed revealed an unexpected slowdown in manufacturing when the Empire Manufacturing Index (EMI) came in at a negative 5.9 for August, it was the first contraction in the index since October 2011. The Consumer Price Index (CPI), was also flat in July, coming in well below the 2 percent increase economists were predicting.
The two reports reignited investor concerns that the U.S. economy just can't gain the traction necessary to send a signal to small business that it's time to increase the workforce. This is bullish for Gold. “There is a very solid case for additional accommodation under the Fed’s dual mandate of maximum employment and 2 percent inflation,” wrote Goldman Sachs' Jan Hatzius in a report published on Tuesday after the close of U.S. markets. “We do believe that Fed officials will ultimately decide to ease policy further.” Andrey Kryuchenkov, of VTB Capital added,"(The data is) comforting to those who believe in QE3."
Meanwhile, in an interview with newswire MNI, Standard & Poor’s Nikola Swann, said on Wednesday that U.S. government finances have deteriorated further since the ratings agency stripped the country of its top AAA rating last year. “The U.S. fiscal profile has continued to gradually deteriorate since last summer, at a rate in-between our base- case scenario and our downside scenario of August 2011, keeping the U.S. at the high end of our indebtedness range,” said Swann.
The nation now has a AA+ rating with negative outlook after S&P downgraded the country for the first time in history on Aug. 5, 2011. The ratings firm cited the U.S. government’s failure to agree on deficit reduction measures as one of the primary factors for its downgrade. S&P's John Chambers, in an interview on Bloomberg Radio, in February, said the U.S. lacked a plan to regain the top rating, and the agency warned as recently as June 8, that the grade may be cut even further by 2014. Protect your wealth and your retirement, during these times of economic and geopolitical uncertainty, by investing in physical Gold and Silver bullion.
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