Gold falls below $1,125 as US Dollar Index adds 1% on China monetary policy outlook

Precious metals also got hit by a stronger US Dollar as gold slipped to US$1,123/oz, while silver and platinum declined to US$18.43/oz and US$1,625/oz respectively.
The US Dollar Index, which measures the greenback’s strength against a basket of six other currencies, rose 1% today, curbing demand for gold, which is seen as an investment alternative to the dollar.
The movements in the currency market were influenced by today’s news from China, where the government has reportedly told banks to cease lending until the end of the month just a week after upping the reserve requirements for banks by 0.5% to 15% of their deposits following an increase of bank-reserve ratios and interbank rates to curb economic activity and prevent the economy from overheating, boosting the American currency’s appeal as a safe haven for investors.
Meanwhile, the yellow metal continues to be in selling mode as holdings in the largest gold backed exchange fund SPDR fell by a further 0.91 metric ton to 1,112 tonnes.
Mining stocks were in correction today with platinum miner Lonmin (LSE: LMI) emerging as the heaviest faller in the sector in the FTSE 100 with a 4.7% loss, while gold miner Randgold Resources (LSE: RRS) and silver producer Fresnillo (LSE: FRES) lost 2.3% and 2.7% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) declined 3.3%.
Midcap miners suffered steeper losses. Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) lost more than 5%, while fellow FTSE 250 constituent gold miner Petropavlovsk (LSE: POG) did relatively well, shedding just 1.5%.
Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) was one of the top performers among the juniors with a 3.5% climb.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML), South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and Commodity asset development company Mercator Gold (AIM: MCR) moved with the sector, shedding 8%, 6% and 4.5% respectively. Tajikistan operating gold miner Kryso Resources (AIM: KYS) and Africa operating gold miner GMA Resources (AIM: GMA) were down 3.7%, while Western Australia operating Norseman Gold (AIM: NGL) slid 3%.  http://www.proactiveinvestors.co.uk/companies/news/12428/gold-falls-below-1125-as-us-dollar-index-adds-1-on-china-monetary-policy-outlook-12428.html