Gold Demand: Could This Factor Drive it Down?
Sometimes it sounds like gold is the only sector in decline these days. After all, stock markets are making record highs, and even beaten-down retailers like JC Penney have seen their stock prices bounce. By contrast, gold demand remains sluggish.
But all is not rosy everywhere. Chinese growth is slowing, with demand for raw materials is projected to be 30% less in the coming year. This does not bode well for construction materials, copper or oil – and possibly not for gold, either.
We don’t think about gold as a construction material, per se, but there are uses for gold in electronics, which are used by companies inside buildings. The trickle-down is fairly obvious: fewer buildings means fewer companies, which means less of everything that companies use.
Commodities markets are pricing in these expectations now, and we can’t tell yet where the drop will stop. Today’s featured article looks around the commodity space at influencing factors, hopefully saving you from reading a lot more articles.