Gold drops on improvement in Chinese data

Gold halts its three-day advance after the improvement in Chinese data which raised concerns China will raise interest rate to curb inflation, thereby reducing the appeal of the metal as safe haven.

Spot gold is traded at $1362.70 an ounce after recording a high of $1371.07 and a low of $1362.06.

In the last two years, the shiny metal gained momentum from fears of the global financial crisis which hit major economies pushing them into recession and causing slowdown in emerging economies, such as China.

Thus, the progress witnessed today in Chinese real GDP, industrial production and retail sales raises the possibility of seeing more tightening in monetary policy by the Chinese central bank to ease inflationary pressures.

China's CPI slipped to 4.6% in December from 5.1% and producer prices gauge fell to 5.9% from 6.1%, yet the rate is still high.

With the rise in oil prices, global economies are facing price acceleration which actually helped gold prices to remain high till now.

Oil is currently trading at $91.17 a barrel from the day's opening at $91.60.

The dollar's rebound today affected dollar-denominated commodities; the dollar index, which tracks the dollar movements versus a basket of major currencies, rose to a high of 78.84 from the day's starting level at 78.55.

The greenback took advantage of the drop in US shares yesterday when it fell on slowdown in US housing starts and drop in Goldman Sachs earnings.

The previous session, gold added $2.80 or 0.20% to close at $1369.81, while gold price was setin London at $1372.00 per ounce declining from $1373.75 during the AM fixing.

Among other precious metals, platinum edged down to $1818.00 from the day's opening at $1829.20, palladium plunged to $802.00 from $810.70 and silver plummeted to $28.35 from $28.73, as of 08:20 GMT.