SAN FRANCISCO (MarketWatch) — Gold futures sold off Friday on concerns China will soon take steps to rein in its inflation and move to increase interest rates.
Gold for December delivery (GCZ10 1,364, -39.70, -2.83%) dropped $39, or 2.8%, to $1,364.30 an ounce on the Comex division of the New York Mercantile Exchange. The contract earlier traded as low as $1,362.90 an ounce.
Gold had lost more than $30 overnight, but seemed to have recovered somewhat at the start of floor trading. Nervous investors, however, pulled the plug on gold after they saw other commodities and stocks selling off.
If China tightens, it raises the likelihood more countries would follow suit, said Matt Zeman, a trader at LaSalle Futures in Chicago. Gold would lose one of its main engines so far: fear of inflation, he added.
Moreover, gold, which earlier this week posted a fourth consecutive record high, and silver, which has traded at 30-year highs almost daily, “are markets that are going to be very vulnerable to profit-taking,” he said.
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