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Published: Wednesday October 20, 2010 MYT 7:46:00 AM
NEW YORK: Gold and other metal prices fell Tuesday as China's government announced it will boost interest rates, roiling currency markets and suggesting China might curtail its appetite for raw materials.
Gold for December delivery fell $36.10 to settle at $1,336 an ounce. Silver for December delivery fell 63.3 cents to settle at $23.780 an ounce, while copper fell 9.75 cents to $3.7575 a pound.
China's interest rate hike is intended to control inflation and rapid growth even as other Asian economies move to keep their recoveries on track.
The rate on a one-year loan was raised by 0.25 percentage points to 5.56 percent effective Wednesday, the Chinese central bank said. The one-year rate paid on deposits was raised, also by 0.25 percentage points, to 2.5 percent.
The move made traders sell out of positions in gold, silver and other metals as they anticipated a drop in Chinese demand, said Carlos Sanchez, analyst with CPM Group in New York.
"That was a major factor weighing on asset classes across the board," Sanchez said. "It would suggest there will be reduced demand for raw materials from China."
In other metals contracts, palladium for December delivery dropped $9.65 to $578.45 an ounce. January platinum fell $19.40 to settle at $1,673.60 a pound.
Grain prices also fell.
Corn for December delivery fell 11.25 cents to settle at $5.46 a bushel. Prices for other agricultural futures followed corn lower. Wheat for December delivery fell 18.5 cents to settle at $6.715 a bushel. Soybeans for January delivery fell 3.5 cents to settle at $11.915 a bushel.
Most energy prices fell, led by crude oil.
December crude trading on the New York Mercantile Exchange fell $3.64 to $80.16 a barrel. In November contracts, heating oil fell 8.68 cents to settle at $2.1893 a gallon, while gasoline fell 10.32 cents to $2.0483 a gallon.
Natural gas for November rose 8.2 cents to $3.513 per 1,000 cubic feet. - AP
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