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China May Stimulate Economy Gold Prices Up
by Michael Locklear
September 27, 2012 – News out of China indicates that the Chinese government is on the verge of announcing monetary easing in order to boost their market. Gold prices pushed upward to its highest levels in two weeks.
Today it was reported that China’s industrial profits continued to drop in August for the fifth consecutive month which has gold investors excited again. Gold prices enjoyed a substantial increase from the announcement of the Federal Reserve’s third round of monetary easing in an effort to stimulate growth in the U. S. Economy, and supported gold prices to rise nearly 10% in a recent rally. Now gold receives an additional boost on speculation that China will soon join the European Central Banks, the Federal Reserve and the Bank of Japan and move to stimulate its economy in the very near future. Analysts are saying that the news from China adds additional support for gold.
September may see the largest quarterly rise in gold prices in more than two years as gold prices continue to move upward this month. Announcements of increased economic stimulus from major players around the world, continues to fuel fears of currency instability and inflation, which is good news for gold.
Concerns over the debt crisis in the euro zone resulted in investors in the gold market moving to take profits from recent record gains resulting in a sharp decline in gold prices yesterday. There was however a slight recovery before the day ended. Central bank actions were less aggressive than originally anticipated, which offered additional support for gold prices to rise.
Investors are currently waiting to see what Spain’s new economic management program will look like when it is revealed tomorrow and whether or not the European Central Bank will offer more support in the bond market. It is unclear in what direction Spain will go since currently the yield on its bonds are stable.
There was some profit-taking in gold exchange traded funds yesterday resulting in a selloff of 340,000 ounces according to Reuters. Nonetheless future projections for increases in gold holdings remain positive as the funds are expected to continue the recent nine week growth cycle into the near future.
The spot price for gold today is at $1776 per ounce. This puts gold back in range to break the $1800 per ounce ceiling as some analysts anticipate. They’re still strong expectations that gold will reach $2000 per ounce or perhaps higher by year’s end. Right now we’re waiting to see exactly what China will do and what decision will be reached after the announcement by Spain tomorrow.
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