Future commodity prices will depend on the success or failure of China’s economy, Tom Hutchinson, senior editor of the Newsmax newsletter "The High Income Factor," told Newsmax TV.

"The Bloomberg commodities index, which includes a lot of commodities, oil, sugar, lumber, a lot of different things, to give you a broad picture, is at a 13-year low," Hutchinson told “Newsmax Now.”

"The financial crisis was six, seven years ago. So it's lower than it was at the peak of the financial crisis and how much lower will they go? It depends on the strength of the global economy and in particular, China because that's what really drives commodity markets," he said.

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Hutchinson’s comments came in light of the fact that China's gold reserves have increased 57 percent since the last time it reported its holdings, The Wall Street Journal reports. The People’s Bank of China on Friday said it has 53.32 million troy ounces of the precious metal in reserve. It last reported its holdings in April 2009.

Meanwhile can China’s currency get reserve status?

"I suppose they can and that can actually be a good thing for gold going forward. But what's really knocking gold down, that's what knocked it down today, the news from China that the reserves aren't as big as they though," he said.

"But what's really knocking it down are the same factors that have been knocking it down since 2011, namely the relatively stronger U.S. economy and a strengthening dollar and the story just got new legs recently with Greece and the Chinese stock market and less faith in the global economy."

He said commodity prices may also sway future Fed rate decisions.

"I don't want to bet on what the Fed will do, but remember, the lower commodity prices are also stimulative. This is good for the economy. So in another way, it's a reason to step up and raise rates."

(Newsmax wire services contributed to this report.)

About Tom Hutchinson
Tom Hutchinson is a member of the Newsmax Financial Brain Trust. Click Here to read more of his articles. He is also the editor of The High Income Factor. Discover more by Clicking Here Now.

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