Daily Gold Update

Source: American Gold Exchange

Austin— After gaining 2.3% in three sessions, gold dipped 0.7% today and commodities fell across the board on worries that an economic slowdown in China will reduce global demand for raw materials. As we've said before, gold sometimes trades as a commodity and other times as a currency. Today, with relative stability in Greece reducing safe-haven demand for now, its commodity role took over. More sensitive than gold to industrial weakness, silver dropped 2.3% and palladium 0.8%. Platinum, however, which remains under-supplied because of the recent mining strike in South Africa, rose 0.6%. The S&P GSCI Index of raw materials fell as much as 1.2%.

At the close: April gold slid $11.70 to $1,699.80; May silver lost 80 cents to end $33.41; April platinum gained $10.80 to $1,695.70; June palladium fell $5.70 to $704.25 an ounce.

China posted a whopping monthly trade deficit of nearly $31.5 billion in February, its largest since 2000 and far more than analysts expected. This news comes one week after China cut its growth target for the first time since 2005. Both its shocking trade deficit and reduced growth expectations are attributed to weakening demand for exports, especially within the recessionary eurozone, and faltering consumption within China itself. It's a jarring one-two punch that's suddenly forcing the market to face a global economy no longer propelled by a supercharged Chinese juggernaut.

Last Friday, S&P published a report listing a slowdown in China as one of the main threats to the U.S. economic recovery. S&P finds the threat to be "plausible" and "stable" that China could fall to 5% GDP growth, which would result in "reduced Chinese imports of commodities/raw materials [as] global economic growth suffers." This threat is only slightly weaker than that of eurozone sovereign debt contagion, which is considered "plausible" and "increasing." The good news for gold investors is that China's slowdown bolsters the case for monetary easing, which is generally bullish for higher global gold prices.