Daily Gold Update

Source: American Gold Exchange

Austin— Gold lost ground today as the dollar rallied on stalled Greek bond talks and a dismal IMF world growth report warned that the eurozone debt crisis has reached a "perilous new phase." The report projects global output to decline from 3.8% in 2011 to 3.3% in 2012, with the U.S. growing by a scant 1.8% and the E.U shrinking by half a percent. The Global Dow and the euro pulled back as the dollar rallied off two-week lows.

At the Comex close: February gold slid $13.80 to $1,664.50; March silver gave back 30 cents to $31.98; April platinum lost $8.70 to $1,552.40; and March palladium fell $8.30, to $680.55 an ounce.

After a few days of relative optimism, serious concerns about Greek debt sustainability are back as progress on a bond deal has ground to a halt. Private bondholders are demanding a revised yield of 4% while the so-called "troika"�the EU, IMF, and ECB�refuse more than 3.5%, saying a higher rate will not allow Greek debt to be sustainable. Hence, it won�t release the bailout funds without which Greece will likely default by March. Speaking today at the Bloomberg Sovereign Debt Crisis Conference in New York, Johns Hopkins economist Steve Hanke said the game is already over: "Since the crisis began the money supply has been shrinking and the economy is going to implode, no matter what they do in the short run."

Underscoring the pessimism, a new report from the Peterson Institute for International Economics, a highly respected, nonpartisan global think-tank, declared: "ECB is now treading a dangerous path. It feels compelled to provide adequate liquidity to avert systemic financial collapse, yet must presumably limit its activities in order to prevent a loss of confidence in the euro�i.e., a change in market and political sentiment that could lead to a rapid breakup of the euro area." The report, which is co-authored by former IMF chief economist Simon Johnson, unhappily concludes that "successive plans to restore confidence in the euro area have failed" and "proposals currently on the table also seem likely to fail." If Greece falls into uncontrolled default or the euro zone disintegrates, we'd expect both the dollar and gold to rise strongly as the only viable safe-haven alternatives.