Gold declined in New York, heading for a weekly loss, as concern that China may tighten monetary policy further curbed demand for bullion. China ordered lenders to park more money with the central bank for the third time in five weeks. Gold climbed to a record $1,432.50 an ounce on Dec. 7 in part on speculation Federal Reserve policy makers will extend Treasury purchases. Fitch Ratings yesterday cut its rating for Ireland after the country sought international assistance last month. China’s reserve ratio hike is “a strong sign that interest rates will be increased sooner rather than later,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “This is negative for gold. Gold is still in a consolidation mode at a high level.” Gold futures for February delivery lost $3.30, or 0.2 percent, to $1,389.50 an ounce at 8 a.m. on the Comex in New York. Prices are down 1.2 percent this week, heading for the first weekly loss in three. The metal for immediate delivery in London was 0.1 percent higher at $1,388.65. Reserve requirements will increase 50 basis points starting Dec. 20, the People’s Bank of China said on its website today. Policy makers refrained from adding to October’s interest-rate increase. Some investors buy gold as a hedge against low interest rates and higher inflation. Treasury Purchases Gold has jumped 27 percent this year, heading for the 10th straight annual gain, after governments spent trillions of dollars and kept borrowing costs low to boost economies hurt by the most severe global recession since World War II. Fed policy makers will meet next week to discuss a potential plan to extend Treasury purchases beyond the $600 billion already announced. Fitch yesterday said the European Central Bank’s bond purchases may need to be increased and Europe’s rescue fund expanded to stem contagion from the sovereign-debt crisis. “There is still a degree of uncertainty surrounding the U.S. recovery and Europe’s sovereign risk issues,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said in a report. Investors have been buying gold as a protection of wealth, he said. Gold assets in exchange-traded products fell 2.22 metric tons to 2,095.76 tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14. Silver holdings gained 11.13 tons to 15,020.19 tons, the highest amount since at least February, data from four providers show. Silver ‘Safe Haven’ Silver for March delivery in New York lost 0.2 percent to $28.77 an ounce. It rose to $30.75 on Dec. 7, the highest level since March 1980, and is up 71 percent this year. Prices reached an all-time high of $50.35 in New York in 1980, a year after the Hunt brothers tried to corner the market. “Investors who view silver as a safe haven asset are expected to continue buying large amounts of silver over the next couple of years,” New York-based research company CPM Group said in a report yesterday. The metal will be supported by industrial uses, and China may account for 20 percent of global fabrication demand this year, it said. Palladium for March delivery gained 0.4 percent to $744.70 an ounce. It climbed to $780 on Dec. 3, the highest price since April 2001. Platinum for January delivery was 0.2 percent higher at $1,682.60 an ounce. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Sungwoo Park in Seoul at spark47@bloomberg.net. To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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