Personal Finance
Gold drops on China interest rate hike rumor, stronger dollar
(Xinhua)
Updated: 2010-11-13 09:52
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CHICAGO - Gold futures on the COMEX Division of the New York Mercantile Exchange on Friday suffered a sharp drop, falling below $1,400, on a stronger dollar and speculation that China will raise interest rates to tame inflation.
The most active gold contract for December delivery shed $37.8, or 2.7 percent, to $1,365.5 per ounce.
Market hearsay went that China is likely to raise its benchmark interest for the second time to rein in inflation. China's October's CPI, a major gauge of inflation, hiked 4.4 percent from the same period of last year, triggering wide speculation that the central bank will lift the interest rate.
"When you talk about the interest rate rise, you are talking about the tumble in gold market," said Mike Daly, a senior gold broker with PFGBest.
Moreover, the rally in US dollar also weighed on the gold market. Before Friday, the dollar index has increased for five straight trading days on concerns over Ireland debt repayment.
"Both of gold and silver has been overbought technically, so the market needs a correction," said Mike, "But, the EU economy is still fragile, Japan and South America are not good either, so people will still put money in gold market as safe-heaven."
The gold prices have gained 28 percent so far this year and topped $1,400?per ounce on Monday and fluctuated around the mark.
December silver fell $1.463, or 5.3 percent, to $25.942. Platinum also lost $61.2, or 3.5 percent, to $1,684. 6 per ounce.