Gold & Silver Drop Almost 2% as China Tightens Monetary Policy

From Chris Mullen at GoldSeek.com...

Gold rose to $1157.87 an ounce in Asia on Tuesday, and then fell $7.65 to $1143.65 by early trade in New York.

Gold rebounded to find slight gains by late morning, but fell hard into the close and ended near its late-session low of $1125.00 with a loss of 1.9% for the session.

The Gold Price in Euros fell to €779.

Silver climbed to $18.79 and dropped to $18.32 an ounce before it also rebounded back near unchanged by late morning in New York, but it too fell back off in late trade and ended near its early afternoon low of $18.14 with a loss of 1.8%.

Platinum lost $19.50 to $1564.50, and copper fell over 9 cents to about $3.34.

Gold Mining and silver equities fell over 2% at the open before they rebounded slightly midmorning, but they then fell back off for most of the rest of trade and ended with almost 4% losses on average.

Oil fell on continued warm weather that reduced demand expectations.

The US Dollar index traded mixed and ended near unchanged as traders digested news that China raised the yield on 1-year bills, drained $29bn in cash from its bond market, and said it would raise the reserve requirement ratio at commercial banks by 0.5%, effective next week, to restrain rampant credit growth.

Treasuries rose while the Dow, Nasdaq, and S&P fell on disappointing earnings reports.  Bonds added to their early gains after a 3-year note auction drew a strong bids, covering the amount on offer almost 3 times and pushing yields down below 1.49%.

The US Trade Balance for Nov. came in at a sharper-than-expected deficit of $36.4bn, greater than Oct.'s $33.2bn reading.

Small-business confidence in the United States was reported at a 5-month low.

Wednesday at 14:00 EST brings the US Federal Reserve's Beige Book of analysis, and the US Treasury Budget for December, expected to show a deficit of $92.0 billion.

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