China: Commodities To Rise Further; Gold Run Near End; Dollar Worse Than Euro

Adding to concerns of worldwide food inflation, China says that loose monetary policies in the developed economies will put even more upward pressure on global commodity prices as well as weigh on the dollar this year.
The People's Bank of China also warned of a deepening of the European debt crisis. It pointed to Europe's debt woes as well as inflation and the potential for asset bubbles in developing markets.

However, it says that the dollar would fare worse than the euro.

Chinese Central Bank: "In 2011, the dollar will be on a downward trend overall, because of the slow recovery of its economy, low interest rates and twin deficits," "The possible spreading of European sovereign debt crisis and geopolitical risks may push up the dollar in some periods."

It adds that short-term interest rates in major economies would gradually rise, but not much:  "But as the global recovery momentum is not strong, the increases will not be too large,"

Furthermore, it says that wealthy nations are printing money to kick-start their economies and that this would inevitable push up prices.

"Developed countries will continue with their loose policies and global liquidity will remain ample, which will keep prices of commodities, especially crude oil and grains at high levels,"

Gold concerns: The bank says that concerns about inflation would trigger demand for gold, but the precious metal's bull run may be near its end:. "We need to note that gold prices have reached historical highs, and its downward risks should not be overlooked,".
"All countries should avoid competitive devaluation of their currencies and pay more attention to risks brought by excessively loose policies on the back of a global recovery,"

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