By Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Gold futures and industrial metals such as copper came under pressure Wednesday on concern that China might tighten its lending measures and slow demand from the world's fastest-growing economy.
Gold for February delivery recently fell $16.40, or 1.4%, to $1,123.60 an ounce. Copper for March eased 6 cents, or 1.6%, to $3.39 a pound.
The China Banking Regulatory Commission has asked several commercial banks to stop issuing new loans for the rest of January, the state-run China Securities Journal reported, citing several sources.
China's Shanghai Composite dropped 2.9%, with the shares of many mining and metals firms taking a hit. Read more on Asian markets.
The report also fueled demand for the safety of the U.S. dollar, further pressuring gold and dollar-denominated commodities. The dollar index (DXY 78.22, +0.72, +0.92%) gained 1% to 78.231. The index tracks the dollar against a trade-weighted basket of six major rivals.
China's top banking regulator, Liu Mingkang, denied the report. But he said Chinese banks were expected to issue about 7.5 trillion yuan ($1.1 trillion) in new loans in 2010 compared with 9.59 trillion yuan in 2009, reflecting efforts to rein in bank lending, which nearly doubled last year.
The report follows several tightening measures earlier this month. Data due Thursday are expected to show China's fourth-quarter economic growth topped 10% from the year-earlier quarter.
Also weighing on gold, crude-oil futures fell nearly 2% to trade below $78, pressured by the jump in the dollar and expectations of higher U.S. petroleum inventories.
