U.S. Growth Boosts Gold Prices

During the first quarter of 2013, many had high expectations for an economy that appeared to be on the uptick. Now, numbers for early 2nd quarter are causing analysts to pay closer attention to what has been occurring, and they may even serve as a catalyst for a boost in gold prices.

According to the LA Times, recent economic growth has fallen below expectations at 2.5%, a number that many aren’t exactly thrilled about. While growth of any kind is, of course, preferred, 2.5% doesn’t quite hit the 3% rate of growth that analysts expected for early 2013.

As a result of the not-so-hot economic numbers that are surfacing, U.S. gold is looking towards a boost in pricing. On Friday of last week, the precious metal saw its biggest gain since 2011, according to Reuters.

This comes at a time during which gold prices and forecasts have actually been rather weak, causing many investors to rethink the way they’ve been approaching the metal as an investment opportunity. 

Now that recent numbers regarding the economy have analysts on edge, it should stand to reason that U.S. gold prices may end up starting once again on a steady upward climb.

A Precarious Scenario

It would be unfair to mention a slowing in growth of the U.S. economy without at least pointing out that the economy has indeed continued to show signs of promise, at least in comparison to the latter half of the 2000s. Business inventories have already seen a rebound, and consumer spending has gone up.

Add to this smaller cuts in federal defense, and it would appear at surface value that the United States economy is poised for a bright future.

It hasn’t all been perfect, however. The hopes for a 3% growth in GDP has been revised down to 1.2% for the second quarter of 2013, a shift that occurred after first quarter numbers didn’t exactly live up to expectations.

Much of this is due to the fact that business investing has slowed and trade has weakened, two major elements that can affect GDP growth. Unemployment also continues to remain an issue, failing to hit numbers that fall within the projected goal for growth.

A shaky global economy has also had an effect on the United States, something that many have overlooked in the midst of all this. The Eurozone, for example, is craving stability in its economy after the latest blow from Cyprus, during which the island’s banks came very close to collapsing.

China’s economy has slowed slightly as well, with consumer spending and the purchasing of certain raw materials falling below expectations.

While it’s not always easy to see how economic shifts throughout the world can affect America, the current scenario is a prime example.

A Bright Future for Gold? 

No one ever wants to hear that the economy isn’t performing quite as well as was hoped, but the current news may actually end up being good for gold in the long-run.

Spot gold increased in price by $4.06 an ounce last week—excellent news for investors who have been paying close attention to the metal for some time now. Given the fact that gold saw a tremendous slump the previous week, the improved numbers are quite promising.

Gold is also considered by many to be a hedge against inflation and commonly enjoys a boom in times of economic uncertainty. Given the situation in Europe and Asia, as well as the fact that America’s economy has showed signs of slowing down in recent weeks, it should come as no surprise that many are looking towards gold again as a safe bet.

While it’s too soon to tell whether the recent boost in pricing will continue, many have their sights set on keeping gold in their portfolios. 2013 should prove to be a very interesting year for the metal, especially if the economy remains in a state of volatility and uncertainty.

If you liked this article, you may also enjoy:

• Gold Panic Selling
• Cyprus Gold Bullion Sale