Economic Times of India

Gold rush: Keep an eye on China, dollar movements

October 12th, 2009

By Kiran Kabtta Somvanshi
Gold prices touched a new high of $1061.5 per troy ounce in the international spot markets last week. Bullion prices have risen by 20% in the past six months to cross the $1000 mark. In India, the price of the yellow metal has appreciated by nearly 10%, crossing the level of Rs 15,000 per 10 grams.

While a weakening US dollar, inflation worries and the uncertainty regarding a global economic recovery have contributed to the dizzying rise, buying by economic powerhouse China has also contributed to the rally.

The Asian dragon has been steadily buying huge quantities of gold since the past nine months, pushing up its price. According to the latest data released by the World Gold Council on world official gold holdings, China has the sixth-largest gold holding in the world at 1040 tonnes as on September 2009. The country has been on a gold buying spree — doubling its holdings in the past six months.

The Chinese authorities are pushing their citizens hard to buy gold, probably as a protection against a possible credit bubble. The main state-owned television company is reportedly promoting gold and silver as investment. Chinese banks are soon slated to sell gold and silver bullion bars in four different sizes to individuals, and if reports are to be believed, China’s largest bank — the ICBC — is setting up a precious metals department to handle the growing investor demand.

According to international industry watchers, high gold prices suit China. If Chinese authorities are pushing gold as an investment for its citizens, then it becomes obligatory to hold the price by propping it up. Investors in India would obviously need to keep an eye not just on buying by China but also on the movement of the US dollar in the global currency markets. That will determine the future course of the price of gold.

These articles are provided for informational purposes only and were obtained from publicity available sources on the Internet. These articles do not constitute financial advise or trading recommendations by Global Asset Management ("Global"). Global neither warrants the accuracy or completeness of the information contained in these articles, undertakes to update them, nor is it responsible for any omission or error contained in these articles. Viewers are encouraged to conduct, and should only rely on, their own independent research.
The purchase or sale of precious metals involves substantial risk and volatility. If you are contemplating purchasing and/or selling precious metals, you should consult with an independent financial advisor to learn about the inherent risks. Global does not render, and nothing in this website should be construed as, financial advise, a trading recommendations or a solicitation for the purchase or sale of precious metals.

Daily Chart : Gold

Daily Chart : Silver

Daily Chart : Platinum

Daily Chart : Palladium


Copyright © 1996-2010 Global Asset Management. All rights reserved.

2425 Hollywood Blvd. Suite 100. Hollywood, Florida 33020 ::

phone: 954.921.1021 :: fax: 954.921.1536 :: toll free: 1.888.421.1021