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Gold Bullion on Factory Orders

Gold bullion is very strongly influenced right now by any economic data coming out of the United States as gold waits for the impetus and the consequence of monetary policy to further propel the price of gold higher in the future. The gold market has been experiencing a relative slump in the past few months as the market comes to grips with contradictory data coming from the United States.

June 6, 2012 - Only a few months ago investors were looking at the February jobs report, which added 20,000 jobs to the US economy and taking it as a major indicator that we had indeed turned a corner and the United States economy was getting better. Now, in addition to the trouble coming out of the European Union, we are seeing much less promising jobs reports in addition to further troubling economic data.

The most recent and most troubling of these economic data points is the factory orders report which showed a decline where a gain was expected. New factory orders fell in April constituting the third decline in four months according to the Commerce Department. Orders for manufactured goods were down 0.6% on the month in April and March orders were revised downward.

At the same time, activity in the precious metals markets is following a slumping trend line. Gold bullion was down .84% during intraday trading on Monday, trading at just over $1600 per ounce with a morning high of $1623.10 an ounce. Silver lost a little more ground with a decrease of 1.81% and a spot price at $28.16 for Troy ounce. Price references for both precious metals were relatively unchanged from the previous week and the trend line showed a continuation of market dynamics as they were before massive devaluations in the euro caused a flight to the US dollar and a temporary surge in gold

Aside from the troubling economic data emerging in the US, there is the larger shadow of Europe on all American financial activities. The latest of which is a focus on Spain, which has admitted that it will need a bailout from the euro zone. Unemployment in Spain among the youth aged 18 to 25 is at 51% and the Mediterranean country, like Greece, has been experiencing political unrest in the form of full-blown riots. Greece, which has received its third bailout package from Germany, has indentured and indebted its populace through austerity measures until at least the year 2020, at which time the Greek governments project they will only have a 127% debt to GDP ratio.

The slowing economic data out of the United States, coupled with the overarching threat to the American economy from the euro zone crisis, will bring a renewed valuation to the precious metals markets, though it is difficult to indicate the time trends will take place with any degree of accuracy. It is fiscally logical that gold bullion will increase in value and spot price as these major market dynamics unfold and unwind.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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