Metals prices were falling Tuesday after news of higher inflation in China sparked concerns that the government there may try to arrest the economy's growth rate.
Benchmark contracts for gold bullion were losing $5.80 at $653.20 an ounce, while silver was off 13 cents at $13.15 an ounce in recent New York market action.
The exchange-traded funds that hold stocks of the precious metals,
streetTracks Gold Shares
iShares Silver Trust
, were down 0.6% and 0.8%, respectively.
Weighing on the sector was a report that consumer prices in China last month grew 3.4% from a year earlier, pushed up in part by higher food costs. The increase was the biggest jump in 27 months.
The advance, which comes on the heels of 3% inflation in April, is also above the 3% target rate set by the country's central bank, and it raised fears that the government might move to cool prices by slowing overall economic activity.
Some investors choose to purchase gold and silver as a long-term hedge against rising consumer prices, because precious metals are believed to keep their real value over time. Therefore, any concerted effort by a major monetary authority such as the People's Bank of China to fight inflation could be interpreted as a bearish factor.
As for base metals, copper prices were dipping by 7 cents at $3.29 a pound after data showed falling imports of the metal into China during May.
Turning to the ferrous metals, steelmaker
was losing another 3%, following a 6% decline Monday that was spurred by its profit warning.
Also in the steel patch, Bear Stearns dinged shares of
with a downgrade to peer perform from outperform, sending the stock lower by 2.2% in recent action.