CNBC ran an article on gold that indicates that gold has hit a floor.
The main reason offered is a good one: demand for gold is high in India and China. The Indians are traditional holders of gold. They respond to prices. When they perceive the price as low, they buy.
The Chinese are just getting into this market, but in it in a big way. If they are buying, this is a good sign for other owners of gold.
The main use of the gold is jewelry: in the range of 45%. This tends to be one-way demand. The gold is not bought primarily for speculative demand.
“This demand comes from the price-sensitive markets, especially India and China,” Steel said.
Some forecasts of Indian gold purchases this year reach an annual increase of 20%.
Gold sales in Hong Kong are up 150% this month over last month.
A 15% increase in both regions could increase consumption by 250 metric tons this year. That would be 10% of annual world gold production
Net increases in central bank purchases could reach 450 tons. There is no indication that central banks will be net sellers.