Gold at 2 and half week high, Euro Gains Against Dollar

Gold prices surge ended lower on Wednesday after surging in a 5 day rally and ended close to 2 and a half week high Tuesday as a result of expectations that the U.S. Federal Reserve will not raise interest rates until September. Also the U.S. dollar index has been weak recently that prop up the prices of precious metals.

Both Gold and silver have gained some momentum, the April Comex gold was last up $5.10 at $1,192.80 an ounce, it peaked at $1,195.30. May Comex silver was last up $0.049 at $16.94 an ounce. The Gold's 5-day rally that started when the U.S. Federal Reserve last week warn about the U.S. economy and the pace of any rate-hike.

Analyst expects the price of Gold could go up to $1,200 in the immediate future and $1,240 in the next quarter.

The demand for gold which do not pay interest had been hurt by expectations of a near-term rate hike, however it all change when the U.S. Federal Reserve surprised investors by indicating that they won't rush raising the interest rates. They may hold it to current level up to at least September.

A weaker dollar also makes bullion cheaper for holders of other currencies, and increases its appeal as a hedge.

The Euro has edged out the US dollar early Wednesday. It went up sharply against the dollar about 0.5% in early European trade to $1.0966, well above its recent 12-year low of under $1.05.

The euro also gained against the yen and the British pound. Brent crude oil rose 0.1% to $55.14 a barrel.

U.S. Economy Slows Down to 2.2%

The U.S. economy growth is slower than what was initially thought in the 4th quarter of 2014, since decrease in stockpiling by businesses and a weak trade balance affected the economy.

The country's economic output is up at the rate of 2.2% in the 4th quarter of 2014, last month the initial estimate of was 2.6%. The revision also represented a steep deceleration from the blistering 5% annual rate of growth reported in the third quarter of 2014.

Economists on Wall Street has already expecting the revision even before the announcement, they even expected that it should be at 2%. The Commerce Department released the revision on Friday, it is the 2nd of 3 estimates that are revised as more data comes in. The final estimate will be out by late March.

The cause of the revision is due to slow additions to inventories by businesses than first estimated, removing 0.7% from the headline number for growth even though other underlying components like demand from consumers remained healthy.

U.S. manufacturing index for April declines

US manufacturing output shrank to its lowest level in four years in May as slowing export growth and tight fiscal policy caused factories to slow production.

The Institute for Supply Management’s manufacturing index tumbled to 49 from 50.7 in April that indicates slow down in manufacturing for the first time since November 2012, when a massive storm hit the East Coast. The index dipped to its lowest level since June 2009, when it registered 45.8 percent. (A reading below 50 indicates a shrinking manufacturing sector).