Gold & Silver Wait Patiently for More Easing

After having a strong performance the prior day, the markets experienced a broad pullback Friday as growth data from China disappointed investors. Gold prices fell more than 1.5%, while silver dropped 3.3%.

The National Bureau of Statistics in Beijing announced that China’s economy grew at 8.1% in the first quarter of 2012, its slowest pace in about three years. Economists were expecting growth of about 8.3% and the whisper number was around 9%. In comparison, China grew at 8.9% in the previous quarter, and 11.9% in the first quarter of 2010. Song Yu, China economist at Goldman Sachs explained, “Growth in the first two months was weak. We had some loosening of monetary and fiscal policy in March, but it wasn’t enough to save the quarterly number,” according to the Wall Street Journal.

As the charts show below, gold continues to meet resistance at $1,680 per ounce and declined to $1,655 on Friday. Meanwhile, silver has resistance at $32.50-$33 per ounce and fell to $31.40. Both precious metals have remained in a tight trading range as monetary easing expectations continue to fluctuate in media headlines.

 

While the slowdown in China may provide more room for easing in the world’s second largest economy, economists and investors appear to be torn about more monetary easing in the United States. According to a recent survey of economists by the WSJ, 36 out of 51 economists polled believed the Federal Reserve will not take further action, such as another round of quantitative easing. Growth is still providing economists with enough hope to remain optimistic. The report explained, “On average, economists estimate that gross domestic product grew a respectable, if not particularly strong, 2.2% in the first quarter. They forecast growth to accelerate throughout 2012 to a 2.7% quarter-over-quarter annualized rate by the end of the year.”

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