Commodities slid across the board on Wednesday on fresh signals from China that it will soon raise rates with lingering Euro area debt woes also helping keep investors away from risky assets.
Wen Jiabao, the Chinese Premier, on Tuesday appeared on state television and said that the cabinet was drafting measures to counter excessive inflation.
In another development, Chinese Central Bank Governor Zhou Xiaochuan said on Tuesday that China is under pressure from capital inflows. He said at a forum in Beijing that the government goal is to provide moderate credit growth and stronger liquidity management.
There was assurance from the Ministry of Commerce as well. A ministry spokesman said Tuesday that it will adopt measures and work in concert with other government agencies to cool the inflation heat prevailing in the country.
We would enhance the connection between vegetable production and sales to stabilize supply and prices in winter and next spring, spokesman Yao Jian said at a news conference.
The People's Bank of China (PBoC) raised its benchmark interest rates in October for the first time since late 2007 and it boosted banks' reserve requirement ratio last week. Consumer prices had risen 4.4 percent in October from a year earlier, beating all the street numbers.
Gold and silver traded near their 2-week lows on Wednesday. At around 7:30 ET on Comex, the yellow metal was at $1,1334.0 an ounce, down from previous close of $1,3384.4. By then, silver had touched a low of $ 25.015 per ounce, from $25.233 at close on Tuesday.
At the same time, copper and platinum fell to their lowest since late September. The precious one had fallen as low as $1,630 and the most-traded base metal copper fell to a low of $3.606, down from Tuesday's close of $3.7275, Comex data showed.
Crude for December and January delivery were equally active on Wednesday with the December one falling as low as $81.18 per barrel, its lowest since October 29, and down from Tuseday's $82.34 as per Comex data. January crude also dipped to a 2-week low of $81.68 a barrel.