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Gold Rises, but Copper Slips

June-dated copper contracts fall 2 cents to $3.29 a pound.

Copper prices were slipping yet again Friday as a decision by China's central bank to raise rates led to concerns about future demand for the metal.

June-dated copper contracts were down 2 cents at $3.29 a pound in New York trading.

The decline came after the People's Bank of China said it would hike borrowing costs by 0.18% and at the same time lift the reserve requirements for lending institutions. Both actions are likely to restrain economic activity.

In addition, the bank said it would allow the Chinese currency to float more freely, likely leading to an appreciation of the yuan. That in turn would make Chinese goods more expensive overseas.

"In the near term this may add further pressure to the already weak and vulnerable sentiment towards copper," states a daily brief from the commodities team at Barclays Capital in London. Even so, they remain resolutely positive for strong copper demand in the longer term.

On the technical side of things, chart watchers note an improving picture but remain nervous after the recent tumble in prices, which have dropped from $3.70 a pound on May 8.

"We still would not want to bottom-pick here despite some technical indicators showing that we are oversold," writes Edward Meir, a commodities analyst at futures broker Man Financial, in a daily brief. "Instead, we prefer to wait for prices to hold, turn, and stay higher before initiating any length."

Shares of the copper companies were mixed in recent action.

Southern Copper

(PCU)

was up 0.2%, while

Freeport-McMoRan Copper & Gold

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(FCX) - Get Freeport-McMoRan, Inc. (FCX) Report

was off 1.1%.

The

PowerShares DB Base Metals

(DBB) - Get Invesco DB Base Metals Fund Report

exchange-traded fund, which tracks the prices of industrial metals, was down 0.5%.

As for the precious metals, gold and silver prices were edging higher on the back of a weaker dollar.

July-dated contracts for silver were tacking on 6 cents at $12.94 an ounce, while gold for June delivery was rising $2.30 at $659.50 an ounce.

The dollar was selling for 121.20 yen, down from 121.34 yen late Thursday. One euro was buying $1.3502 up from $1.3495 previously. Over time the price of gold tends to rise as the value of the greenback falls.

However, fresh worrying signs of waning investor sentiment toward gold came in the form of another drop in bullion holdings by

streetTracks Gold Shares

(GLD) - Get SPDR Gold Trust Report

, the largest gold ETF. Thursday alone saw inventory fall more than 8.5 tons, and in the past month assets held by the trust shrank by 31 tons to 469 tons currently.