China Interest Rates Drop - What it Means For Gold

Pinnacle Digest writes: In his latest market breakdown, Adrian Ash explains that the revised US jobless figures worsened from last week’s already dismal report. Despite gold taking a small downturn today, the economic data is suggesting higher prices in the near-term.

China Interest Rates Drop

For starters, China surprised everyone today by announcing a rate cute. This was the first rate cut for the world’s second largest economy in three years. Could it be a prelude to further easing from the Fed?

 China’s exports have slowed recently and if an inflationary move is made by the Fed, exports could get even worse without preventative measures. This rate cut from China could be the first strategic move of many for the communist nation if the Fed gets aggressive at its next meeting.

The currency race to debase, as a way of making exports more competitive, may just be picking up steam heading into July. If such a scenario emerges, gold prices could be flirting with record levels once again.

According to Walter de Wet at Standard Bank, his group is looking for $1900 an ounce by Q4 of this year. With that stated, he personally believes the Fed will not act at its June meeting, which over the short-term, will be bearish for gold.

Added bullishness for gold: In his article, Adrian Ash states “After announcing a drop of one-sixth in its Euro debt holdings yesterday, Kazakhstan's central bank today said it will buy gold worth some $1 billion to raise the proportion of bullion in its reserves from 12% to 15%.”

Click here to read Adrain Ash’s full report.