Gold reversed its earlier gains after the World Bank cut global growth forecasts which negatively affected shares and commodities. The WB lowered global growth to 2.5% this year compared with 3.6% announced in June, where the euro area contraction of 0.3% will impact the growth pace in emerging markets. The WB also expects the U.S. to expand 2.2%, down from prior estimates of 2.9%. Accordingly, spot gold is currently around $1645.42 an ounce, after falling from a high $1659.29 while the day's low was recorded at $1642.62. Crude oil is also traded higher near $100.91 a barrel, snapping earlier advance, compared with the day's opening of $100.94. The cut in global forecasts added to concerns after the German government revised down growth expectations for 2012 to 0.7% from 1.0% while said exports growth is expected to slow dramatically to 2.0% versus 8.2% in 2011. Still, there are worries in the markets from the euro area despite the IMF plan to expand its lending capacity by $500 billion to protect the global economy from the negative consequences of the European debt crisis and the successful debt auctions seen by many euro area nations this week. Today, Germany sold two-year bills at lower yields and stronger demand, where the government sold 3.44 billion euros of 2-year notes with an average yield of 0.17% from 0.29% in the prior auction, while the bid-to-cover ratio improved to 2.2 times compared with the previous 1.43 times recorded December's auction. Portugal also auctioned 1.25 billion euros, 754 million euros and 496 million euros of 11-, 6- and 3-month bonds respectively, where the yield of the six-month bills retreated to 4.74% from 5.25% in the prior auction. However, Fitch ratings said today six euro area nations, namely Spain, Italy, Ireland, Cyprus, Belgium and Slovenia, are under review for a possible one to two notches cut by the end of the current month. On the otter hand, the dollar index, which tracks the dollar movements versus a basket of major currencies, pared some of its losses for the third day to hover around 80.74 after dropping to a low of 80.59.
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