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Data on U.S. Economy Boosts Optimism

Release Date: 
Friday, December 23, 2011

The price of gold moved higher on Friday, along with stocks and the euro, as market sentiment improved. The metal traded at $1610.40 per ounce at 5:41 a.m. Pacific Time on the New York Spot Market while silver was at $29.49 per ounce.

November U.S. durable goods orders rose by the most in four months, which offset consumer spending that fell short of expectations. Paul Zemsky, the New York-based head of asset allocation for ING Investment Management said, “It’s important to take it all with the totality of the week. We had fantastic data on housing and jobs earlier this week, so overall, this data is weak, but the jobless claims trumps it because it’s more forward-looking.” The news adds to recent positive U.S. data on new housing starts, existing home sales and jobs.

On Friday, House Speaker John Boehner agreed to a two-month extension of a payroll tax cut. Earlier in the week, Fitch Ratings warned that rising U.S. debt was inconsistent with the nation maintaining its AAA credit rating. "A key task of an incoming Congress and administration in 2013 is to formulate a credible plan to reduce the budget deficit and stabilize the federal debt burden. Without such a strategy, the sovereign rating will likely be lowered by the end of 2013," Fitch stated. Last month, Fitch changed its U.S. credit rating outlook to negative from stable.

(Sources: “Stocks Advance for Fourth Day Amid U.S. Recovery Signs; Commodities Gain,” Bloomberg, December 23, 2011; “PRECIOUS-Gold firms as upbeat data lifts euro, stocks,” Reuters, December 23; “Fitch Again Warns US Debt Burden Threatens AAA Rating,” CNBC, December 22, 2011)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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