Gold pared losses after a four-day selloff as the European Commission cut growth forecasts and traders speculated the metal’s recent slump has been excessive.
The EU said gross domestic product in the 18-nation euro area will rise by 0.8 percent this year and 1.1 percent in 2015, down from projections for 1.2 and 1.7 percent in May. Gold futures are trading near the lowest level since 2010 after tumbling almost 5 percent last week.
Bullion for December delivery was down 0.2 percent at $1,167.60 an ounce on the Comex as of 8:13 a.m. in New York. The metal climbed as much as 0.4 percent after the EU’s statement, recovering from a 0.5 percent retreat. Gold for immediate delivery added 0.3 percent to $1,168.85 an ounce, according to Bloomberg generic pricing.
“This is a corrective bounce,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. “There’s clearly some bargain hunting.”
The bleaker outlook in Europe highlights the fledgling nature of the region’s recovery and the deflation threat that has compelled the ECB to take unprecedented stimulus measures. The EU lowered its growth projections for Germany, Europe’s largest economy, and said inflation in the euro area will be even weaker than the European Central Bank predicts.