Gold for December delivery dropped $15.80 to $1,387.50 an ounce in electronic trading on Globex. The contract earlier traded as low as $1,377.30 an ounce.
“Chinese rate-related apprehensions were sufficient to make for a $31 drop in gold during the overnight hours. Thus the yellow metal found itself back to roughly last week’s post-Fed announcement levels,” metals analyst Jon Nadler said in a report to clients.
The contract gained $4 in New York Thursday to settle at $1,403.30 an ounce. See Thursday's metals column.
Markets worldwide were abuzz with talk China is preparing for an interest-rate increase to counter rising inflation.
The country said Thursday its inflation rose 4.4%, its highest in two years.
Some, however, welcomed gold’s retreat.
“I would call this pullback some froth being taken off the market,” said Julian Phillips, editor at GoldForecaster.com. “I do believe that a large number of short position holders were badly squeezed in the run up too, [so] this current temporary pullback will be a consolidation period.”
Losses in gold prices Friday came as the U.S. dollar index, which measures the greenback against a basket of six major currencies, declined to 77.894 from 78.16 late Thursday in North American trading.
Phillips pointed out that “retail demand from India was pretty good this year, but that is complete, so the market is back to where it was before.” Indians celebrated last week one of the Hindu calendar’s most traditional holidays to buy gold.
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