Gold this week received a blow from some unexpected quarters. During the past few weeks, the driving force behind gold has been the Euro zone economic crisis. First it came from Greece then Portugal crisis helped the yellow metal gain and cross $1,200 per ounce mark and in a latest development, the Ireland financial woes boosted the gold prices.
However, this never ending crisis-driven gain for gold was cut short this week by the news that growth across the 16-nation eurozone accelerated for the first time in three months in July.
This report came from research group Markit, which said purchasing managers' index (PMI) rose to 56.7 in July, from 56.0 in June. Any score above the 50-point line indicates economic growth. And this positive news hit gold prices in global markets, which witnessed a steady fall during the past few days.
Markit said the data indicated a better-than-expected start to the second half of the year. However, Markit also warned that despite the upturn, inflows of new orders are growing at a pace well below April's peak, in part due to further signs that export growth is slowing as global trade flows cool. Service providers also provided the most downbeat assessment of future activity for eight months.
In the service sector the PMI index rose to 56.0 points from an upwardly-revised 55.5 in June. The manufacturing index rose more strongly, to 56.5 points from 55.6 in June.
The euro zone's private sector surged ahead this month, according to a survey released today, confounding expectations for a slowdown in growth and further quelling concerns about a double-dip recession.
Both the services and manufacturing sectors saw the pace of growth accelerate and firms took on more workers but survey compiler Markit warned in a teleconference that it might be a temporary boost from the recent soccer World Cup.
The Euro zone economy is seen growing at 1.3 per cent next year, compared to 2011 forecasts for 2.0 per cent in major trading partner Britain and 2.8 per cent for the United States, the world's biggest economy.
Germany, the 16 region's biggest economy, saw its services sector grow at its fastest pace in almost three years while its manufacturing sector saw growth pick up to a pace not far off April's 14-year survey high.