Gold prices dip in Asia with China economy, Middle East tension eyed

Gold prices inched lower in Asia on Wednesday in cautious trade as investors look for direction on China's econmic policies and events in the Middle East.On the Comex division of the New York Mercantile Exchange, gold for February delivery fell 0.07% to $1,077.50 a troy ounce.Silver futures for March delivery dropped 0.04% to $13.975 a troy ounce, while copper futures for March delivery eased 0.10% to $2.093 a pound.Overnight, gold ticked up in spite of a broadly stronger dollar on Tuesday, as widespread geopolitical concerns in the Middle East and fears of slowing global economic growth remained in focus.It followed Monday's surge when the precious metal jumped by more than $15 an ounce, as investors digested news that Saudi Arabia cut diplomatic ties with Iran after protesters stormed the Saudi embassy in Tehran over the weekend in response to the execution of a prominent Shiite cleric. Gold has also risen by nearly 3% in value since a major sell-off last month in the aftermath of the Federal Reserve's first interest rate hike in nearly a decade.On Tuesday morning, the People's Bank of China (PBOC) injected the most cash into the nation's open-market operations since September, one day after weak manufacturing data for December sent Chinese equities crashing, sparking fresh concerns of a further slowdown in the world's second-largest economy. In its latest effort to bolster its flagging economy, the PBOC offered 130 billion yuan ($19.9 billion) of seven-day reverse repo's on Tuesday at an interest rate of 2.25%. The stimulus measures are aimed at lowering borrowing costs in order to jumpstart activity in an economy that is projected to report its slowest annual growth rate in more than two decades.The cash injections also fueled speculation that the PBOC could cut interest rates before the start of the Chinese New Year on February 4. Last year, the Chinese central bank slashed interest rates on six different occasions in its most aggressive easing initiative since the height of the Financial Crisis.China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India. China is also the world's largest consumer of copper, accounting for more than 40% of the world's total consumption.Metal traders continued to monitor activities in the Persian Gulf in the wake of the execution of Shiite cleric Sheikh Nimr al-Nimr and 46 others by Saudi Arabia over the weekend.