Will bad news out of China actually be bullish for gold?
When gold shot up like a rocket from, say 2005 to 2011, one of the biggest cases made was that growth from growing Asian mega-economies such as China would drive up demand for the yellow metal.
Yet, with Chinese trade data released today showing signs of slowing (exports falling 3.1% rather than rising 3.3% as expected), is there actually a bullish case to be made for gold because of it?
According to a recent report by Barclays, the answer may be yes.
The reasoning is as follows: As investments in China begin to fall in value, Chinese investors will look to a safe have in the form of gold. The report also says there will be a shift in China from buying during holiday seasons to buying consistently throughout the year. Additionally, some traders feel the Chinese government may look to re-stimulate its economy, and that could be good for gold as well since gold is a hedge against inflation.
So, based on that thinking, while a rising China was a buy signal, a declining China is a buy signal, too.
Is that thesis right or is gold going to break like china? We ask CNBC contributor Steve Cortes, Founder of Veracruz TJM to look at the fundamentals and Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, to look at the technicals.
To see Cortes and Ross analyze gold given China’s economy, watch the video above.