Gold has fallen quickly after the Chinese government reported that it will raise reserve requirements for banks by another 50 basis points in the recent attempts to calm inflation.
This is already the 6th increase in 6 months.
The most recent consumer price index update shows that inflation in China increased to 5.5% last month, the highest in 36 months.
China’s continuing efforts to curb growth in consumer prices dampens gold’s appeal as an inflation hedge.
The US dollar, which is seen as an alternative investment to gold, was broadly flat against other major currencies.