Gold dropped, paring this month’s gains, on speculation that China may take more steps to slow inflation, damping demand for commodities including precious metals. Silver and palladium fell, reversing earlier increases. Immediate-delivery bullion lost as much as 0.3 percent to $1,362.95 an ounce and was at $1,365.52 at 2:46 p.m. in Seoul. Prices have advanced 0.5 percent this month, set for a fourth straight monthly gain. The February-delivery contract was little changed at $1,366.70 an ounce on the Comex in New York. “Gold appears to be weighed on by the market concern that China may increase interest rates to curb inflation,” said C.S. Oh, head of the overseas futures team at NH Investment & Futures Co. in Seoul. “That seems to be affecting other commodities.” China’s stocks dropped, sending the benchmark index towards its first monthly drop since June, as speculation the government will raise rates and Europe’s debt crisis may spread threatened the economic outlook. China, the top user of raw materials, ordered banks to set aside larger reserves twice this month after raising interest rates in October. Consumer prices jumped 4.4 percent last month, more than the 4 percent median forecast in a Bloomberg News survey of 28 economists, the statistics bureau reported Nov. 11. The country needs to raise interest rates by another 200 basis points to curb inflation given existing excess liquidity, Zhong Jiyin, an economist with the Chinese Academy of Social Sciences, wrote in a commentary in the China Daily today. The Dollar Index, which tracks the currency against six counterparts, gained 0.1 percent at 2:53 p.m. in Seoul. Gold typically moves in the opposite direction to the U.S. currency. IMF Sales The International Monetary Fund said yesterday it sold 19.5 metric tons of gold in October to shore up its finances. The sale cut the Washington-based lender’s holdings at the end of the month to 2,846.7 tons, said Alistair Thomson, a spokesman. The IMF said in 2009 it would put 403.3 tons up for sale as part of a program to lend at reduced rates to low-income nations. The bank sold 212 tons to India, Sri Lanka and Mauritius. In February, the bank said it would begin “on-market” sales. Silver for immediate delivery lost 0.3 percent to $27.06 an ounce, trimming increases this month. The price is still set for a fourth monthly advance. The metal has risen 61 percent this year, reaching $29.36 an ounce on Nov. 9, the highest price since 1980. Immediate-delivery palladium fell as much as 1.1 percent to $683.75 an ounce, still set for a fifth monthly gain. Platinum for immediate delivery lost as much as 0.7 percent to $1,635.85 an ounce, poised to decline for the first time in three months. To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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