On Wednesday, gold (NYSEARCA:GLD) futures for February delivery gained $4.30 to settle at $1,659.90 per ounce, while silver (NYSEARCA:SLV) futures jumped 41 cents to settle at $30.54.  It was the highest close for gold in five weeks.

The World Bank cut its global growth forecast to 2.5 percent this year, citing a recession in the euro zone that threatens to further weigh on a global economy already plagued by a slowdown in emerging markets.  The Washington-based institution today lowers its forecast from a June estimate of 3.6 percent in the largest revision since January 2009, when the lender cut its global estimate for that year by 2.1 percent. The euro area may contract 0.3 percent, compared to a previous forecast for a 1.8 percent gain. The U.S. growth outlook has been cut from 2.9 percent to 2.2 percent.

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“Even achieving these much weaker out-turns is very uncertain,” the World Bank said in its Global Economic Prospects report released today. “The downturn in Europe and weaker growth in developing countries raises the risk that the two developments reinforce one another, resulting in an even weaker outcome.”

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) increased .44 percent, while the iShares Silver Trust (NYSEARCA:SLV) jumped 1.5 percent.  Gold miners (NYSEARCA:GDX) such as Newmont Mining (NYSE:NEM) and Yamana Gold (NYSE:AUY) declined by 1.28 percent and .13 percent, respectively.  Silver miners (NYSEARCA:SIL) such as Hecla Mining (NYSE:HL) and Endeavour Silver (NYSE:EXK) climbed 1.68 percent and .21 percent higher, while First Majestic (NYSE:AG) was flat.  The Sprott Physical Silver Trust (PSLV) declined 9 percent as the fund announced a follow-on offering, looking to raise $300 million in order to purchase more silver bullion.

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According to the latest GFMS annual survey, central banks increased net purchases by fivefold to 430 tons in 2011, and may purchase another 190 tons in the first half of 2012.  Last year’s net purchases of gold by central banks was the highest level recorded since 1964.  In 2010, net purchases only equaled 77 tons.  “Attitudes among central banks haven’t really changed,” Thomson Reuters GFMS annual survey said. “There’s still that desire to come into the gold market to diversify some of the assets away from foreign exchange and to boost gold holdings.”

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

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