Gold prices recovered from earlier losses on Wednesday after a set of disappointing U.S. economic reports

Gold prices recovered from earlier losses on Wednesday after a set of disappointing U.S. economic reports renewed speculation that further monetary easing may be forthcoming.  The spot price of gold fell to $1,592.42 per ounce in overnight trading, but bounced back above the $1,600 level after data on manufacturing and inflation came in below economists’ estimates.  The SPDR Gold Trust (GLD), the world’s most liquid gold price proxy, inched up by $0.40, or 0.3%, to $155.53 per share in morning trading

The gold price also received a boost from investor data released after financial markets closed yesterday.  According to their latest 13-F filings, legendary investors George Soros and John Paulson each raised their stake in the SPDR Gold Trust (GLD) during the second quarter of this year.
Soros Fund Management more than doubled its investment in the GLD, while Paulson & Co. increased its holdings by 26% to 21.8 million shares.  In doing so, Paulson & Co. remained the largest shareholder in the GLD.

The Federal Reserve is unlikely to launch a third round of quantitative easing (QE3) until either late this year or early in 2013, according to Goldman Sachs chief U.S. economist Jan Hatzius.
In his latest note to clients, Hatzius – who previously predicted a QE3 announcement at next month’s FOMC meeting – argued that the recent collection of better than expected U.S. economic data is likely to keep Ben Bernanke and his fellow central bankers on hold for the time being.

Paulson’s purchases reflected commentary he made earlier this year, when in February he told clients that gold was his favorite long-term bet.  He cited the yellow metal’s ability to protect against rising inflation, currency debasement, and a potential breakup of the euro zone.

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