China Buys Gold

Recently, the price of gold has been under pressure because of a decision by the IMF to sell off much of its gold reserves. While I believe that most other factors support the bullish case for gold, I also recognize that the bullish scenario is threatened by decisions by the IMF and certain central banks to sell gold.

Now the price of gold increased somewhat on the news that the Chinese seems to have a different attitude towards gold than Western central bankers, as they have announced that they are buying gold. If China and other emerging economies starts to buy a lot of gold, then this will cancel out much of the effect of the gold sales of other central banks, and so improve the odds of future gold price increases.