This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Gold Prices Settle Lower; China Fights Inflation

Stocks in this article: AUY

NEW YORK ( TheStreet) -- Gold prices were consolidating their gains Friday as China took more steps to stem inflation.

Gold for December delivery settled down 70 cents at $1,352.30 an ounce at the Comex division of the New York Mercantile Exchange. Prices lost 1.4% of their value this week. The gold price Friday traded as high as $1,362.90 and as low as $1,341.

The U.S. dollar index was down 0.12% at $78.48 while the euro rose 0.21% to $1.36 vs. the dollar. The spot gold price was losing 70 cents, according to Kitco's gold index.

Gold prices flat-lined Friday as China's central bank raised the amount of money banks must hold in their reserves by another 50 basis points. This is the second move in two weeks and the fifth this year. By raising the reserve ratio, China is hoping to take more money out of circulation to keep a lid on inflation, which popped in October to 4.4% from a year earlier.

Traders had been expecting some kind of move, although the rumor was a hike in interest rates, which the country typically does around the 20th of any given month. Raising the reserve ratio is not as aggressive as raising key interest rates, but is enough to cap gold's 1.2% rally on Thursday.

"Every bit of news suddenly takes on a greater level of importance when people are at this level of nervousness," says Jon Nadler, senior analyst at The more China takes steps to manage inflation, the more the investors buying gold as a hedge against inflation might dump their gold positions. Less cash in circulation and higher borrowing costs also cut into people's ability to spend.

China is quickly catching up to India as the largest gold consumer in the world. In the third quarter, jewelry demand rose 8% and demand for gold bars and coins surged 64% from year earlier levels, according to a report by the World Gold Council. Any decrease in demand from the country would hurt a key growth factor for the gold market.

Adrian Ash, head of research for, says panic is unfounded and that central banks would have "to raise interest rates by a long way before it really makes a difference for cash savers."

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs