The IMF now believes the eurozone to contract by 0.5% in 2012, a 1.6% point cut from the initial September forecast, before returning to sluggish growth of 0.8% in 2013.
Economists said the IMF was "playing catch-up" with a loud chorus of negative forecasts that have grown along with the European sovereign debt crisis. Christine Lagarde commented, "Financial conditions have deteriorated, growth prospects have dimmed, and downside risks have escalated."
"The longer we wait, the worse it will get.
From Goldcore
Gold’s London AM fix this morning was USD 1,659.00, GBP 1,064.08, and EUR 1,277.04 per ounce.
Yesterday's AM fix was USD 1,669.00, GBP 1,072.69, and EUR 1,282.17 per ounce.
Gold edged up after an early dip on buying from jewellers in Asia this morning. Prices are trading narrowly as investors await the outcome of the US Federal Reserve meeting with its decision on interest rates at 17:30 GMT.
Expectations are that chairman, Ben Bernanke, will point to interest rates sticking near zero into 2014 according to a Reuters poll. Any hints of interest rates remaining low for a longer period will continue to put pressure on the dollar and will boost gold's safe haven appeal. This will also allow investors to take higher profits by purchasing gold in other currencies.
Gold increased $2.29/oz to $1,667.89/oz by 0637 GMT. Gold touched a six week high of $1,681.16 on Monday.
Yesterday in its World Economic Outlook update, the IMF cut its projection for global growth in 2012 to 3.3%, down 70bp from its forecast in September. The global economic body blamed this largely on a "mild recession" expected this year after the eurozone entered a "perilous new phase" toward the end of 2011.
The IMF now believes the eurozone to contract by 0.5% in 2012, a 1.6% point cut from the initial September forecast, before returning to sluggish growth of 0.8% in 2013.
Economists said the IMF was "playing catch-up" with a loud chorus of negative forecasts that have grown along with the European sovereign debt crisis. Christine Lagarde commented, "Financial conditions have deteriorated, growth prospects have dimmed, and downside risks have escalated."
"The longer we wait, the worse it will get. The only solution is to move forward together. Our collective economic future depends on it," said Ms. Lagarde during her speech in Berlin Tuesday.
From the IMF’s poor projections we move forward to the optimism that begins today at the World Economic Forum in Davos, Switzerland. In this beautiful alpine resort politicians, Fortune 500 CEO’s, academics, authors and celebrities will socialize and exchange ideas. Sadly with such a vast group of attendees Davos has rarely been a place for political breakthroughs, economic solutions, or major business deals.
It appears that there is no quick fix to the macro economic problems and gold will still shine in 2012.
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NEWS
(Reuters)
Gold edges up before Fed decision as jewellers buy
(AL Arabiya News)
Dateline Davos: Lots of gloom, but is there room for a bloom?
COMMENTARY
(Mineweb)
While the West argues over bonds, China is buying gold
(Financial Times)
Year of Dragon lifts China gold demand
