Gold dips, World Bank growth revisions spur profit taking
Published Jan 16, 2013 01:38PM ET
Investing.com - Investors sold gold positions for profits on Wednesday, wiping out several sessions of gains after the World Bank cut its global growth forecast for 2013, which dampened appetite for risk-on assets.
Gold prices rose in recent sessions on firming retails sales and on comments from Federal Reserve Chairman Ben Bernanke, who suggested loose monetary policies will stay in place for now.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were down 0.12% at USD1,681.85 a troy ounce in U.S. trading, up from a session low of USD1,673.45 and down from a high of USD1,684.65 a troy ounce.
Gold futures were likely to test support USD1,653.55 a troy ounce, Friday's low, and resistance at USD1,684.85, Tuesday's high.
The World Bank earlier cut its 2013 global growth forecast to 2.4% from a 3% forecast made in June, adding developing nations will struggle this year, which dampened demand for gold and sent investors chasing safe-haven dollar positions.
Gold and the dollar trade inversely from one another.
The multilateral lending institution added that the eurozone economy will contract by 0.1% this year, well below its most recent forecast for growth of 0.7%.
The news wiped out a multi-session rally for the metal.
Gold rose earlier this week when Federal Reserve Chairman Ben Bernanke said in a speech that while the Fed is weighing the costs of its loose monetary policies, which include inflationary pressures, it may be too early to consider winding down stimulus programs today.
The Fed has slashed interest rates to near zero and is currently running a monthly USD85 billion bond-purchasing program, known as quantitative easing, which weakens the dollar as a side effect.
Strong retail sales sent the yellow metal up earlier this week as well.
Gold also rose after the U.S. Commerce Department reported that retail sales rose 0.5% in December, far outpacing expectations for a 0.2% gain.
However, in the U.S. on Wednesday, official data revealed that the country's monthly consumer price index came in flat in December, in line with expectations, after contracting 0.3% in November.
The country's monthly core consumer price index, stripped of volatile food and energy prices, grew 0.1% in December, missing expectations for a gain of 0.2%, which prevented gold from gaining.
A separate report showed that U.S. industrial production rose 0.3% last month, also in line with expectations.
Meanwhile on the Comex, silver for March delivery was down 0.11% and trading at USD31.493 a troy ounce, while copper for March delivery was down 0.89% and trading at USD3.605 a pound.
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Written By: Investing.com
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