I agree that China is the 800 pound gorilla that everyone is watching at the moment.
However I'm not as bullish as you on China's ability to "manage" these hiccups.
Yes they have extensive foreign reserves, but they also have a weakening economy that has used a lot of debt to finance investments which are looking questionable as it becomes obvious that they have a lot of overcapacity in everything from mining, steel production to apartment buildings.
So they can choose to prop up asset prices temporarily, but at some point bad loans and losses will need to be realised.
It would seem the market is already sensing this and we've seen a spike in junk bond yields and capital flowing out of China, forcing Yuan devaluations (and likely greater foreign reserve selling in the future).
It would seem that until the existing overcapacity problems are resolved, losses realised and production brought back into profitable equilibrium it's likely that the USD (and to a lesser degree, gold) will strengthen.
I've updated my thoughts on the gold price in TWI term in the post below:
http://investinginshares.com.au/gold-in-usd-broad-trade-weighted-adjusted-terms-is-still-strong/
