Gold slow out of the gate this week over China concerns
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By Jeremy Holcombe Contributing writer for Goldco Direct and End the Lie Gold was a bit slower coming out of the gate this week based on some concern coming out of China. The eurozone was, of course, still playing a part in gold being slow starting out this week, but after the good news coming out of that region last week things should start to ease up there. News hit the wire today that China reported a pretty high trade deficit in February. While import growth came in nicely at 39.6% y/y, export growth was no where near the same. China reported only about half of that amount, around 18.6% for their export. This number was the lowest reported number by China in a whopping 22 years of constant growth. That news led to gold dropping off to start the week off, so we will need to see how the yellow metal responds the rest of the week. According to a Reuter’s article, "Traders and analysts said the PBOC [People’s Bank of China] appears to be preparing the domestic and global markets for sharper fluctuations to eventually widen the yuan's daily trading band." Given that it happened on the same day that a large trade deficit was reported, I think they were simply sending the signal that China intends to keep its goods and services relatively cheap, by constraining the upside in the yuan. No matter how you look at it, the fact that China reported such low export numbers has to be a concern for many investors, as China is usually one of the leading exporters of materials in the world. Furthermore, it could indicate a contraction in the markets evidenced by a lower demand for imported goods from China, which usually sees steadily high demand. Most investors will see this news as they have seen most of the other news lately; as a small bump in the road. Gold has value at almost any point, and after almost any kind of news. While the price may dip some, the overall reach and outlook of gold remains strong. At the very least, it is a great commodity to invest in if you need to protect some of your money. Look for gold to have a quick rebound and come back up some this week. If it does not recover and perhaps even gain some value this week, then expect it to come next week. Either way, it won’t be long before the yellow metal rebounds, as that has proven to be true time and time again. All one has to do is look at the long term gold price graphs to see how this is on a steady upward trend with small aberrations both up and down which are ironed out in the long run. Don’t be afraid to continue to invest in the yellow metal, as it is still poised to have a nice 2012, and if many analysts are right, it might continue to make its way towards the $2,000 per ounce mark we’ve been hearing so much about. The above article is for informational purposes only and is not a solicitation by End the Lie or Goldco Direct . It is the commentator’s opinion only and not intended for investment recommendations, and does not necessarily reflect the views of End the Lie or Goldco Direct . Any references to outside sources are believed to be accurate. Past performance is not a guarantee of future results. All commodities involve risk. Investors should consult their financial adviser before making any investment decisions.