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China Gold Demand Remains Robust Like Smuggling In India
Posted March 19th, 2014
Los Angeles CA, Mar 19 (Tangible Investments) - by James O’Dell - Gold and silver prices edged lower on Tuesday, with gold easing $9.70 or 0.71 percent to close at $1,356.10 an ounce, after reaching a six month high of $1,391.76 an ounce on Monday before profit taking kicked in, and tensions cooled for the moment in Eastern Europe. Silver dipped $0.32 or 1.51 percent to close at $20.85 an ounce.
With global demand for gold remaining well above available supply, and given the likelihood of continuing geopolitical tension in Ukraine, the latest dip in the gold price is likely to attract fresh buyers, because despite reports to the contrary, China's demand for physical gold remains robust. China's citizens have more faith in gold than in the government or the banks, and with the current threats to China's banking system, and with GDP growth expected to drop by one or two points, we could see a Chinese citizen stampede into gold.
China imported 83.6 tons of gold through Hong Kong in January, and while that may be below the 91.9 tons imported in December, it was up an incredible 369 percent over January 2013. However, some believe that a substantial amount of the gold now moving into China is being re-routed to India. The World Gold Council (WGC) recently estimated that Indian smuggling reached around 200 tons last year.
Meanwhile, Fed Chair Janet Yellen is currently overseeing her first two day policy meeting of the Federal Open Market Committee (FOMC), and will deliver her first press conference afterward. Economists are expecting the Fed to trim another $10 billion from its massive quantitative easing (QE) program, dropping its monthly bond purchases to $55 billion. "There are subtle signs of a possible slowdown in the recovery process in the U.S., but expectations are still that the Fed will go ahead with cutting monthly bond purchases by another $10 billion," says Joyce Liu, of Phillip Futures.
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