NEW YORK (Commodity Online) : China factor pulled down gold and oil prices in New York closing Friday as the dragon nation, world’s top oil and gold consumer, raised banks' reserve-requirement ratio for the third time in a month.
Light, sweet crude for January delivery settled at $87.79 per barrel on the New York Mercantile Exchange while The most active gold contract for February delivery settled at $1384.9.
January delivery crude oil dropped 58 cents or or 0.7%, while February gold delivery declined $7. 9 per ounce, or 0.57 percent on China's decision to tighten bank-reserve requirements, as worries persisted that an interest-rate increase could follow.
China's central bank on Friday raised the reserve requirement ratio (RRR) by 50 basis points from Dec. 20, a move pointing to the urgency of curbing runaway lending amid accelerating inflation.
Country’s statistics agency is due to publish data tomorrow that economists expect will show rising consumer price inflation in the world's second-largest oil-consuming nation.
China's move to raise the reserve requirement is seen as a less drastic form of monetary tightening than an interest-rate rise.
Earlier, the International Energy Agency also warned in its monthly report that the Chinese economy was in danger of overheating.
This week, gold dropped 1.5 per cent, the most since mid- November. Brent crude on the ICE futures exchange settled 51 cents, or 0.6%, lower at $90.48 per barrel.
Analysts said consecutive hikes in dollar also contributed to Friday's drop and investors who have performed well this year may be looking to protect their gains at this stage.
Silver for March delivery shed 21.2 cents, or 0.74 percent, to 28.605 dollars per ounce. Meanwhile, January platinum further fell 3.6 dollars, or 0.2 percent, to 1675.3 dollars per ounce.
Palladium futures for March delivery slid $8.90, or 1.2 per cent, to $732.70 an ounce on the New York Mercantile Exchange, down 4.9 per cent this week. The price has gained 79 per cent this year.
Platinum futures for January delivery declined $3.60, or 0.2 per cent, to $1,675.30 an ounce. The price dropped for the fifth straight day, the longest slump in four months. The weekly loss was 3 per cent. The metal has climbed 14 per cent in 2010
