Saturday, March 13, 2010

China Tightening Weighing on Gold

China and Gold

There is a lot of speculation swirling around out there which could have a strong impact on gold if any of them turn out to be true, with one of those being China could end up tightening its money supply to cool down its economy.

With China it is believed they may raise their interest rates, which could result in not only a downward pressure on Gold prices, but possibly on other commodities as well, if demand slows as a consequence of those actions; if they're what really happens.

But with all the other positive factors for gold to remain in demand, such as inflation and currency weaknesses, gold should continue to find support at around $1,000, or maybe even more, and will be considered a buying opportunity by investors when and if it falls to lower levels.

There are too many variables to make an interest rate hike by China a major game breaker for gold, but it would have a temporary downward pressure on gold, and as mentioned, would present a buying opportunity at that time.

China may attempt to cool off its economy some, but it's not going to do cool it off too much. So including that with other factors, and gold prices should hold strong for some time to come, and eventually will resume their upward climb.

China and Gold

No comments: