Gold Prices Today Plummet on China Interest Rate Concerns

With interest rates being one of the keys to the price movement of gold, gold prices today responded to the news China may combat battle its inflation by raising its interest rates by plunging over $40 an ounce.

With the price of gold continuing to rise almost unabated, it does show those who aren't looking at the underlying support for strong gold prices are jittery, and as mentioned, target interest rates as one of their key metrics as to move in or out of gold.

All of this is based on speculation which evidently was spurred by the consumer price index in China, which increased by 4.4 percent, a rate higher than expected.

Part of what has happened is traders are attempting to lock in their profits and also raise cash in order to cover their margins in other investment areas. Again, these are traders and not gold investors moving the price of gold, and that's when we always get the biggest swings in gold prices.

This happens on a cyclical basis in the economic climate we're in, as worried speculators sell their long positions in gold in order to cover their losses in other sectors.

It's anyone's guess as to whether or not gold will enter a significant period of correction, but that should be considered a buying opportunity, not a reason to get out of the sector.