London: Gold prices eased Tuesday after China raised interest rates for a second time this year, though Eurozone debt concerns and elevated oil prices linked to violence in the Middle East limited losses in the metal.
Silver also retreated after reaching a 31-year high of $38.77 in earlier trade, but traders remain largely on the sidelines ahead of a key European Central Bank rates decision tomorrow.
Spot gold was bid at $1,430.80 an ounce at 1139 GMT, against $1,436.55 late in New York on Monday. US gold futures for June delivery eased 40 cents to $1,432.60. Silver was lower at $38.14 against $38.42.
While China's move weighed on prices of both metals, they remain firmly underpinned by wider issues spooking investors.
"You have [events in] Libya, debt problems in the EU and concerns about inflation supporting the market. Any changes with these three factors will affect the market," said Ole Hansen, senior manager at Saxo Bank.
"We obviously look at the ECB decision on rate hikes. That's a bit of a given now," he added.
"The market is pricing it in at this time, and if the ECB doesn't do anything, we may see the dollar strengthen and we may see a bit of a sell-off."
Eurozone sovereign debt was brought back to the fore by a Moody's downgrade of Portugal, knocking the euro from five-month highs versus the dollar. Worries over the financial health of a number of Eurozone economies were a key factor in gold's rally last year.
Moody's cut Portugal's sovereign debt rating by one notch, raising concerns that debt problems in the Eurozone periphery may prevent the ECB from raising rates three times this year, which the market is pricing in.
Oil prices meanwhile remained near their highest level since 2008 as violence simmered in the Middle East and North Africa and as elections in Nigeria were delayed.
