Gold Prices Slip on World Bank's Soft Economic Outlook (Update 1)
NEW YORK ( TheStreet) -- Gold prices closed slightly lower Wednesday after the World Bank forecast weaker-than-expected global growth for 2013.
Gold for February delivery slipped 70 cents to settle at $1,683.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,684.70 and as low as $1,673 an ounce, while the spot price was adding $1.90, according to Kitco's gold index.
"Today's setback was World Bank lowering growth expectations, anti inflationary somewhat," George Gero, precious metals strategist at RBC Wealth Management, wrote in a note on Wednesday.
Silver prices for March delivery finished down 1 cent at $31.54 an ounce, while the U.S. dollar index was up 0.03% to $79.79.
The World Bank predicted that global gross domestic product would increase 2.4% in 2013, up from 2.3% last year, but still well below the bank's previous prediction that growth would hit 3%.
Gold prices have failed to put together any sort of rally in more than a month -- the yellow metal managed to notch a two-day win streak before Wednesday -- and traders have followed up many down sessions with bargain buying the next day, or profit-taking a day after gold prices make a significant move higher.
The World Bank's soft outlook on the global economy could be seen by some investors as anti-inflationary, Gero said, which traders see as a negative to gold. Gold often performs as a hedge against inflationary concerns.
Gero noted that he expected volatility to continue to dictate the general trend in gold prices because next week would mark a shorter trading period (markets are closed Monday for Martin Luther King Jr. Day) and as option expiration would be on Jan. 28.
Gold had enjoyed decent news from the Federal Reserve from September to December as the central bank implemented two new stimulus programs -- $40 billion a month in open-ended, mortgage-backed security purchases, and $45 billion a month in open-ended, longer-term Treasury bond purchases.
Traders had viewed these programs, as they had with previous quantitative easing measures by the Fed, as inflationary policy because they expanded the U.S. money supply.
But minutes reported on Jan. 3 by the Federal Open Market Committee -- the policy-making wing of the Fed -- revealed a split in sentiment among the voting members on when these easing programs should end. Some of them expressed that easing should conclude well before the end of 2013, while a few others believed stimulus should end at the conclusion of 2013. Still others said very accommodative policy should continue for an extended amount of time.