Gold may decline in London as a stronger dollar curbs demand for an alternative investment and after China pledged further tightening measures. The dollar was near a two-month high against the euro as rising borrowing costs in Spain and Portugal stoked concern that the region’s sovereign-debt crisis will worsen. The People’s Bank of China will use quantitative and price tools to manage liquidity, Deputy Governor Hu Xiaolian said in a statement yesterday. Gold, which usually moves inversely to the greenback, reached a record $1,424.60 an ounce on Nov. 9. “Potential strength in the dollar” may pressure gold prices, Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago, said in a report. “Also helping gold prices lower may be Chinese efforts to reduce commodity prices. Such efforts may take hold in the short-run and reduce the need to use gold as an inflation hedge.” Immediate-delivery bullion added 30 cents to $1,373.55 an ounce at 1:44 p.m. in London. The metal for February delivery was 20 cents lower at $1,374.80 on the Comex in New York. Floor trading is closed today for the U.S. Thanksgiving holiday. Bullion fell to $1,370.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,372.50 at yesterday’s afternoon fixing. China has raised rates, increased the reserve requirement for banks and pledged to use price controls as part of efforts to rein in inflation that quickened to 4.4 percent last month. The Shanghai Futures Exchange will raise trading margins and daily price move limits for contracts including copper, rubber, aluminum, gold, fuel oil and steel, the bourse said in a statement posted on its website today, confirming an earlier report by the China Business News. Battle Manuals South Korea will revise battle manuals and increase its military strength on the maritime border with North Korea after the deadly exchange of artillery fire on Nov. 23, President Lee Myung Bak’s office said. South Korea will also increase diplomatic efforts to secure help from China, North Korea’s closest ally, Lee’s office said. “With the Korean tension easing, investors are watching the debt situation in Europe and this issue may keep depressing the euro,” said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo. Trade in bullion will be limited today because of the U.S. Thanksgiving holiday, he said. Ireland yesterday unveiled a four-year deficit-cutting plan as talks on a bailout of Irish banks neared conclusion. Workers in Portugal staged a strike yesterday before the government faces a final vote in parliament tomorrow on its 2011 spending plan, which includes measures to trim the deficit. Spanish bonds declined even as Deputy Finance Minister Jose Manuel Campa said the nation’s funding for the rest of the year remains “comfortable” and the government doesn’t expect problems tapping financial markets. Silver for immediate delivery in London fell 0.5 percent to $27.44 an ounce. It reached a 30-year high of $29.36 on Nov. 9 and is up 63 percent this year. Palladium lost 0.2 percent to $695.65 an ounce. Platinum was 0.5 percent lower at $1,654.32 an ounce. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Jae Hur in Tokyo at jhur1@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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