When compared to six counterpart currencies, the dollar was trading at its highest level in at least 21 days. And, for the fifth time in 2011, China increased the requirements for reserves at banks as part of its efforts to stave off inflation and cool the globe's most rapidly developing economy.
Gold, silver and other precious metals find themselves "under pressure from the rising U.S. dollar," according to client report by Carsten Fritsch, an analyst at Commerzbank in Frankfurt. "Investors are taking profits with gold to compensate for losses with
At 8:16 a.m. on Thrusday, gold futures dropped 1.21 percent, an $18.20 reduction to $1,483.20 per troy ounce.
"Given that the gold price sold off in line with last week's correction in risk assets, we no longer feel as comfortable with our sizeable gold position as we once were," according to a Wednesday report by Fredrik Nerbrand, global head of asset allocation at HSBC Bank. "We have bought into gold because of its low correlation to equity markets and its ability to moderate portfolio volatility. While this is still the case, we think the diversification benefits have diminished."