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Spot Gold Mid-Day Upate: 27th February 2009

A predictable reaction from the spot gold price when it was confirmed that the US economy shrank in the fourth quarter at an even faster pace than previously estimated.  GDP figures came in at -6.2% against an estimate of -5.4% – which was sufficient to spook the market and european equities and US stock index futures duly fell.   Bullion for immediate delivery added up to $16.97 or 1.8% to $963.17 an ounce.  April futures rose $15.30 (1.6%) to %957.90 an ounce in electronic trading on the NYMEX Comex division.

However, GDP is a lagging indicator and it was only once the Chicago PMI came out an hour or so later that price gains were reversed.  Chicago PMI data came in at 34.2 as opposed to a forecast of 33 and confirmed that while the economy is still in dire straits at least speed of contraction is starting to slow.  As PMI is a leading indicator it is therefore of more value to traders and investors.