Expensive to buy gold for Chinese investors

Published: 28 February, 2014 16:53

Chinese gold investorsA sizable portion of this week’s news in regards to commodity trading places the spotlight on the near steady trading prices of gold.

The reason that we have not witnessed much of an uptrend has much to do with the weaker yuan. In comparison to the dollar, the yuan has been seen to be trading a much lower values than in the recent past.

As this will widen the margins between the Chinese currency and the dollar, gold investments have taken a slight hit due to the higher cost for the Chinese investor.

In the past week, the yuan has sharply decreased in value; a drop not seen for nearly nine years. This has likewise hit the short-term demand for gold investments out of the region. However, with the dollar index falling concurrently, it is not perceived that a bearish stance will return to online gold trading anytime soon.

Oil Trends

In other news, the price of oil has tipped just below one hundred and two dollars a barrel. This downturn comes as a result of what is expected to be a lower estimate of economic growth in the United States during the fourth financial quarter. From an initial 3.2 per cent, many online commodity analysts have predicted that the Commerce Department will revise this figure down to 2.5 per cent.

Due to the simple laws of supply and demand, this is seen to signal that the demand for crude will have slightly tapered; resulting in a concurrent reduction in the price per barrel. However, the aforementioned decline in the dollar index may go a long way to offset any major drop in oil prices in the near future. The majority of online commodity traders will likely be eager to see the revised economic growth figures which are expected to be released shortly.

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