By Cynthia Lin, MarketWatch
NEW YORK (MarketWatch) -- Gold futures slid 0.6% early Wednesday, extending the prior session's deep selloff, after China reported it would not be increasing gold holdings in its reserves.
Gold for August delivery shed $8.10 to $1,187 an ounce on the Comex division of the New York Mercantile Exchange. On Tuesday, the metal lost 1% to fall below the psychologically important level of $1,200 an ounce.
Overnight, China's foreign-exchange regulator said its central-bank portfolio would not be boosting its position in gold, citing limited global bullion supply and price volatility. The State Administration of Foreign Exchange stated its focus remains on return and diversification, ruling out gold as the answer. Read more about China's comments.
As gold weakened, however, reports suggested that physical demand for bullion has risen, limiting the metal's downside potential.
"Indian gold jewellers rushed to replenish stocks ahead of religious festivals and other physical buyers in Asia snapped up bullion after prices fell to their weakest in more than a month," said Pradeep Unni of Richcomm Global in a note.
