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 Kitco.com. 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 bullionvault.com, 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."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
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.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV