The global stock market rout of the past week was sparked by concerns over a possible interest rate rise by the U.S. Federal Reserve and not by the devaluation of China's yuan currency, a senior Chinese central bank official told Reuters on Thursday.
Wall Street racked up its biggest one-day gain in four years on Wednesday as fears about China's economy gave way to bargain hunters emboldened by expectations the U.S. Federal Reserve might not raise interest rates next month.
Wholesale quotes for gold bounced from one-week lows beneath $1,270 per ounce Tuesday morning in London, turning higher as Asian and European stock markets failed to extend Monday's rise to new all-time highs in U.S. equities.
Citi is looking for gold to average $1,255/oz in 2014. The bank believes Chinese physical demand will ‘represent a key source of price support for the gold market…and we believe renewed positive buying momentum in China will prevent a wholesale rout of gold prices.’
A few weeks ago, I showed how money was heading to emerging markets, and it’s worth repeating, as the trend has continued in the new year. . In total, during 2012, nearly $50 billion flowed into emerging markets, with three spikes occurring in January, February and December.
The US dollar, the euro, the yen, all the world’s currencies, are being de-valued by the massive money creation that has taken place and that will continue to happen. Gold’s not really rising – it’s fiat currencies that are falling.
Friday’s US jobs data managed to yield a lift in precious metals values this morning but the advance was itself significantly below expectations and it most certainly did not come at the expense of a notable cratering in the US dollar.