The Chinese government has increased the amount of deposits banks must hold on money lent out. This is expected to reduce the amount on money flowing into commodities, and therefore, some predict that the Gold price will fall back.

This may create an opportunity to buy in the dip. However, the purchasing power of China’s currency will improve in the long term as a result of this rule on the fractional reserve system Chinese banks implement. If your currency is the Dollar, Euro or GB Pound this new regulation won’t have a significant impact commodity prices in the long term.

Here is a Bloomberg article that highlights this issue.