Gold Stops Slider After EU Cuts Growth Forecasts

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.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza