Gold News

Chinese stimulus package is 'positive for gold investment'

Dresdner Kleinwort consultant Peter Fertig has explained today (November 10th) that the $600 billion economic stimulus package announced in China is beneficial for gold investment.

The Chinese government made its announcement yesterday about the plan, which will see the huge figure directed towards extra spending by the end of 2010.

Gold prices picked up almost four per cent after the news emerged and Mr Fertig believes that this is a trend which could continue over the coming two years, Reuters reports.

He told the news provider: "The weakness in the US dollar … and the rise in crude oil and industrial metals reflect the announcement made by Chinese government yesterday for a stimulus package of roughly $568 billion.

"This should spur investment in housing and infrastructure in the next two years, which will (lead to) stronger demand for energy and base metals. This is also a supportive factor for gold."

Such sentiments were also backed up this morning by Ronald Leung, head of Hong Kong's Lee Chong Gold Dealers, who believes that gold will undoubtedly rise as the effects of laying out so much money are felt.

"Gold is boosted by the outlook that all these money injections by governments will sooner or later come into the market," he said.

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