Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
This Invisible Tech Stock Threatens Amazon with 800,000+ Online Stores - 21st Nov 19
Crude Oil Price Begins To Move Lower - 21st Nov 19
Cracks Spread in the Precious Metals Bullion Banks’ Price Management System - 21st Nov 19
Why Record-High Stock Prices Mean You Should Buy More - 20th Nov 19
This Invisible Company Powers Almost the Entire Finance Industry - 20th Nov 19
Zig-Zagging Gold Is Not Necessarily Bearish Gold - 20th Nov 19
Legal Status of Cannabis Seeds in the UK - 20th Nov 19
The Next Gold Rush Could Be About To Happen Here - 20th Nov 19
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Gold and Silver Mixed as Chinese Growth Softens and India Hikes Bullion Import Taxes

Commodities / Gold and Silver 2012 Jan 25, 2012 - 05:52 AM GMT

By: Dr_Jeff_Lewis

Commodities Best Financial Markets Analysis ArticlePrecious metals prices were buffeted last week as news was released of a reduced economic growth rate in China that sparked renewed speculation of near term monetary easing by the People’s Bank of China or PBOC.

The release of softer Chinese GDP data may have prompted a rally in gold and silver prices as traders increasingly anticipated that the PBOC may move to increase economic production by lowering its benchmark interest rates. Chinese stock prices also generally improved.


Nevertheless, these initial gains were soon moderated by selling pressure and gap filling (where technically traders like to see the trade retrace a bit and fill in moves), that emerged in the metals on news that the Indian government would almost double bullion import duties — a move that was expected to dampen demand in the world’s top bullion consuming country.

Chinese Quarterly GDP Falls Below 9% Level

In particular, the Chinese National Bureau of Statistics put out its quarterly Gross Domestic Product or GDP report on January 17th, which indicated that the Chinese economy had grown by only 8.9% in the last quarter ending in December 2011 compared with the level of production seen in the same quarter of the previous year. 

This result was significantly weaker than the 9.1% growth level seen the previous quarter and was also well off the recent 11.9% peak released in April of 2010, although it modestly exceeded market analysts’ consensus expectations of 8.7%.

Furthermore, this event marked the first time since January of 2010 that a Chinese GDP release had fallen below the psychological 9% level. The weaker data also demonstrated a continuation of the recent downwards trend in that closely watched economic indicator.   

Weaker Chinese Growth Data and Home Sales Data Sparks PBOC Easing Speculation

The softer growth seen in China was largely attributed to a decline in the demand for exports due to the ongoing Eurozone debt crisis that has increased the odds that the PBOC may soon ease its currently tight monetary policy stance.

The Euro crisis also took a turn for the worse recently as credit downgrades of more Eurozone member nations were announced during the past week, and this has substantially dampened appetite for risk assets in emerging markets.

Another contributing factor supporting easier PBOC monetary policy was the recent weakness seen in domestic real estate prices in response to the Chinese government’s action to moderate property values. Chinese home sales data for 2011 showed an increase at the lowest level for three years.

India Almost Doubles Precious Metals Import Duties

Also significantly affecting bullion prices in recent days was the news released on January 17th that India would be boosting its import tax on gold by 90 percent and its silver import tax by 100%. The notable import duty rises were aimed at increasing the country’s revenue base by taxing jewelry metals that have historically been very popular as luxury and gift items within the country.

Since India (debatably with China) holds the top spot as the largest consumer of precious metals in the world, this import duty increase could significantly slow demand for physical bullion within that key emerging market economy.

Stock prices of Indian jewelers fell in response to the news, and bullion selling pressure emerged due to anticipated weaker demand, which helped soften gold and silver prices.

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2012 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules