Expectations for monetary easing in China and elsewhere are supportive for gold, says A.L. Waters Capital. As of 8:56 a.m. EST, spot gold was $17.85 higher at $1,660.75 an ounce. “A weaker dollar is adding some support, while the policy outlook in China has given gold its biggest boost,” A.L. Waters says. China’s economy grew 8.9% in the fourth quarter, the lowest in 10 quarters although slightly better than the consensus forecast. “The GDP data in China was positive in two respects,” says A.L. Waters Capital. “A modest slowdown from 2010 is supportive of the potential for looser policy measures, and the fact that it was just a slight slowdown eased fears of a hard landing for China’s economy. For gold traders, loose monetary policy boosts long-term inflation expectations and, therefore, the price of gold.” Meanwhile, uncertainty about Europe remains high, while physical buying continues in China and India, says the firm. “Speculation of further easing by the European Central Bank and the People’s Bank of China will continue to add considerable support to the gold trade in the coming months. While we are unlikely to see a quick return to record levels, the general trend is slowly to the upside.”
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