Gold Price Volatile on China Issues - TheStreet

NEW YORK (TheStreet) -- Gold prices were volatile Wednesday on fears about China's lending policies.

Gold for February delivery was rising 60 cents to $1,099.50 an ounce at the Comex division of the New York Mercantile Exchange. Gold prices have traded as high as $1,102 and as low as $1,091.40. The

U.S. dollar index

was flat at $78.50.

A stronger dollar makes dollar based commodities more expensive to buy in other currencies, which results in weaker investment demand and lower prices. However, in general investors are shying away from riskier assets on fears that China will restrict lending. On Tuesday,

Chinese banks

were required to raise their reserve ratio by 50 basis points igniting fears that the country would curb lending even further.

Also weighing on investors' risk appetite are worries over Ben Bernanke's nomination approval as well as President Obama's so-called war on banks. Investors will look to the

Federal Reserve's

interest rate decision due out this afternoon. Although rates are expected to remain unchanged, investors will look for clues for a sooner than expected interest rate hike.

Despite short term pressure, many analysts are still bullish for the long term. "We anticipate that metals prices will remain volatile over the near-term, particularly with the Chinese New Year approaching," says Anthony Rizzuto Jr., managing director at Dahlman Rose & Co. in his morning metals note. "But we continue to anticipate that over the medium to long term, consumption will trend higher, which should be supportive of prices."

Silver prices

were falling 15 cents to $16.70 while copper was slipping 4 cents to $3.29. Platinum and palladium were sliding to $1,529 and $424, respectively on news that

Toyota (TM) - Get Report

will halt sales of select models in the U.S. due to safety concerns. This could hurt short term demand for the metals, which are used in car production.

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Mining stocks, a more leveraged way to

invest in gold

, were mixed.

Barrick Gold



Newmont Mining

(NEM) - Get Report

were trading at $36.10 and $44.12, respectively. Barrick Gold is currently seeking legal action to resume mining at the Cortez Hills project, which was halted due to a court ruling over environmental issues. Other large cap miner

Kinross Gold

(KGC) - Get Report

was slipping 1.15% to $17.15.

Shares of

Freeport McMoRan Copper & Gold

(FCX) - Get Report

were falling 0.53% to $71.61. The company has benefited from China's stimulus and infrastructure spending. Fears of a pending slow-down would hurt short term copper demand.

Southern Copper


was flat at $29.18.

Yamana Gold

(AUY) - Get Report

was down 0.85% to $10.51 while

AngloGold Ashanti

(AU) - Get Report

was lower by 1.21% to $37.63.

Shares of

SPDR Gold Shares

(GLD) - Get Report

were rising 0.15% to $107.72.

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Written by Alix Steel in New York


Alix joined TV in February 2007. Previously, she held positions in film and theater production, management, and legal administration. Alix has a degree in communications and theater from Northwestern University.