“We are entering a period of strong seasonal growth in gold demand and Chinese New Year is a big part of that,” said Brien Lundin, editor of Gold Newsletter. “Physical demand has been supporting the gold prices on the downside even during the typical slack periods, and I expect that upcoming increase in demand will also support the price, but at higher levels.”...Mainland Chinese saving accounts denominated in gold have grown quickly with little advertising.
“Chinese gold and silver demand has been phenomenal ahead of the New Year holiday,” said Adrian Ash, head of research at BullionVault.com, a leading online service for gold bullion trading and ownership, citing comments from dealers among others.
Shipments have been “heavy” and they began very early, in mid-December, he said.
One skeptic quoted later on said that gold tends to fall when physical demand rises, while increases in investment demand accomapnies a run upwards. This take jibes with last year's experience, where an all-out correction drove gold down to $1,040 by early February. The climatic plummet that drove it down marked the low point of the year.
Another skeptic had a rather unusual reason for why gold may go down: food-price inflation. Why would this drive down gold? The answer: because people need food more than gold!