US economy

Spot gold remained steady during Friday trades completing the week of narrow trading as investor appetite for the save haven bullion diminished on Greece’s austerity measures.

Thursday Greek parliament passed the final austerity measures so as to get the emergency financing from the international lenders and avoid a default.

Meantime, it is widely expected that concerns over troubling US economy will support gold’s appeal.

Spot gold was little changed at $1,498.70 an ounce by 0602 GMT, nearly flat from a week earlier.

The International Monetary Fund has strongly criticized the United States for its loose budget deficit policy that may result in another global economic crisis. The IMF said that the US lacks a “credible strategy” to stabilize its mounting public debt.

The US was the only advanced economy to be increasing its underlying budget deficit in 2011 at a time when its economy was growing fast enough to reduce borrowing, said the fund.

According to the findings of a new survey by KPMG US manufacturing and service industry executives are now more optimistic about the prospects for the US economy. Both sectors believe that the worst of the crisis has passed for America.

68% of manufacturing executives expressed their belief that business activity will be higher in the next 12 months, up from 57 percent in October.

41% of the same executives say they have plans to employ more in the coming weeks and months. Five months ago that figure was 28%.

Warren Buffet expressed an optimistic view of the US economic prospects and said that despite his "enormous respect" for the efforts of Federal Reserve Chairman Ben Bernanke to move the economy forward, more stimulus is not the answer now.

"In the end, I don't think we need more of that," Buffett said in an interview on CNBC television.

Meantime, he believes that with the improvement in the business world a decline in the unemployment rate should also come to the low 7 percent range by the November 2012 elections from 9 percent now.

Gold weakened during European trades on growing optimism over the economic recovery.

Spot gold XAU= slipped to $1,349.35 an ounce at 1122 GMT, from $1,353.30 an ounce late in New York on Thursday. U.S. gold futures for April delivery GCJ1 fell $2.80 to $1,350.20.

Gold has retreated from a two-week high at $1,355.80 hit the previous day, when Federal Reserve chair Ben Bernanke said the U.S. recovery still needed Fed support. His comments were taken to indicate that U.S. monetary policy would stay accomodative.

Ben Bernanke said on Thursday that the US economic recovery still needs help from the Federal Reserve even though the country has more signs of improvement.

The chairman of the central bank now gives slightly better outlook for the largest economy in the world pointing to gains in household spending, improved confidence, and stepped up bank lending as signs 2011 may bring stronger growth than 2010.

The United States faces another financial crisis, says a governmental official. Phil Angelides, chairman of the Financial Crisis Inquiry Commission (FCIC), said that the financial crisis that crippled the economy could happen again.

He blamed regulators for lacking backbone and corporate management for being imprudent. Angelides said it was "striking how little has changed" since the crisis came to a close.

Prices of the bullion declined further on optimism about economic recovery in the United States and Europe. Meanwhile, rising oil prices can provide support and physical demand is also expected to gain traction after Lunar New Year celebration.

Investors awaited the European Central Bank's rate decision later in the day, but the U.S. non-farm payroll data due on Friday was likely to be the main focus, with hiring probably gathering steam in January.

Gold declined during Wednesday trades as rising equities and hopes for further economic recovery in the United States prompted some investors to shift to riskier assets, but lower prices could spur bargain hunting from jewellers.

The safe-haven appeal of gold was also dented by easing tensions in Egypt after President Hosni Mubarak said he would surrender power in September, offering a mixture of concessions and defiance to Egyptians who marched a million strong to demand his 30-year-rule end immediately.

Gold prices stayed near a four-month low in Friday deals after declining over 2% during the previous session as economic reports from the United States and Europe showed steady growth decreasing thus safe-haven demand from investors.

Spot gold was little changed at $1,313.25 an ounce by 0041 GMT, after falling to $1,308.70 in the previous session, its lowest in nearly four months.

U.S. gold futures fell 0.4 percent at $1,313.

According to new stats from the Conference Board US consumer confidence increased more than expected this month to its highest level in 8 months since May 2010. The growth was supported by growing optimism about the economy and the jobs market.

The Conference Board says that its index of consumer attitudes jumped to 60.6 in January, the highest since May 2010, from an upwardly revised 53.3 in December.

Federal Reserve Ben Bernanke made a positive outlook for the US economy yet he stopped short of saying that everything will be super good through the year as jobless rates will unlikely contract substantially.

"We see the economy strengthening. It has looked better in the last few months. We think a 3 to 4 percent-type of growth number for 2011 seems reasonable," Bernanke said at an event sponsored by the Federal Deposit Insurance Corporation.

According to a recent poll conducted by Reuters/Ipsos the US President Barack Obama is again getting approval by American people. Still Americans want Obama to focus on reducing debt and spending.

The survey shows that Obama’s job approval increased to 50% up from 45% in December. It is the first time Obama has achieved 50 percent approval in this poll since last June.

Meantime, many Americans disapprove Obama’s job performance with 47% of respondents expressing their negative attitude which is up from 46% last month.

A new report from the US Federal Reserve published this week revealed that American economy strengthened by the year end. The Beige Book report showed a very bright picture of the US progress but it has made little impression on experts.

Federal Reserve reported better conditions across all 12 of its districts, though banking and financial services showed results that varied by region.

"Economic activity continued to expand moderately from November through December," the central bank said in a statement.

According to new prognosis made by many analysts major tech companies will likely manage to keep up their sales and profit growth in 2011 while still economic troubles in the United States and euro zone debt issue could impact the results.

Intel Corp and other sector heavyweights are expected to keep expanding, albeit at a slower pace than in 2010. Meantime, heavy suppliers like Oracle Corp should enjoy some revival of corporate spending in the first half, while select consumer-centric companies should also do well.