Gold dips after China raises reserve ratios
Gold fell sharply after the Chinese government announced that it will raise reserve requirements for banks by another 50 basis points in the latest attempt to tame inflation. This is already the sixth increase such increase this year.
The latest consumer price index update showed that inflation in China accelerated to 5.5 percent in May, the highest level in nearly three years.
China's continuing efforts to curb growth in consumer prices dampens gold's appeal as an inflation hedge.
The US dollar, which is seen as an alternative investment to gold, was broadly flat against other major currencies today.
The risk of a default by Greece seems to have already been priced into the markets. Standard & Poor's has lowered Greece's rating from B to CCC, which is currently the lowest rating among all countries. However, the move had little if any impact on the price of gold.
Gold last traded at US$1,517/oz. Silver and platinum pulled back to US$34.81/oz and US$1,794/oz respectively.
Most mining stocks slipped into the red today. Lonmin (LON:LMI) dropped 1 percent, while fellow FTSE 100 constituents Randgold Resources (LON:RRS) and Fresnillo (LON:FRES) declined marginally.
In the FTSE 250, Aquarius Platinum (LON:AQP) slipped 2 percent.
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