By Alan Fein

(AXcess News) New York - The price of gold was down nearly 0.6% Thursday morning, dangerously close to breaking the $1100 per ounce barrier as investors mulled economic news from China.

April gold futures were off $6.40, or 0.58%, at $1,106.40 by 9:12am ET in New York as investors look to China to change its monetary policy and cutback on buying gold bullion.  Yesterday, gold lost 1.3%.

In London, spot gold dropped $6.40 to trade at $1,101.80 bid.

As inflation in China continues to rise, China could tighten economic policy further and through it distance itself from holding gold.  Yet some analysts believe that monetary policy in the US could prove to shore up gold demand.

Standard Bank precious metals analyst Walter de Wet said, "With further indications that China could accelerate monetary tightening, as inflation in China has risen, gold demand may wane. Of all the metals (including base and precious metals), we find that gold is the most sensitive to liquidity and interest rates. However, we doubt that tighter monetary policy in China can affect gold demand much. Rather, we believe that monetary policy in the US will be bearish for gold."

China's National Bureau of Statistics said today that consumer prices in China rose 2.7% in February over year-ago levels.  Far higher than the 2.5% gain analysts as a whole where expecting.  China's industrial production rose 20.7% in the first two months of 2010, further adding to inflation pressures.  Yet despite the rate of inflation in China, the dollar has yielded slightly against the euro, though gold continued to show weakness.

Should gold fall below $1,089, a sell off could occur.

The gold composite lost 20 points yesterday to close at 960.2.

Royal Gold (Nasdaq: RGLD; TSX: RGL), which manages gold royalty interests, said after the close of trading Wednesday that it would payout a dividend of 9 cents, though with bullion prices dropping for the fourth-day in a row, investors may not see much price appreciation.

Minature Gold (OTCBB: MGOL) announced drilling at its Zaragoza Project in Brazil Thursday morning.  The Company said that it completed the drilling of the first of a 50-hole drilling program in certain gold mining concessions located in Colombia’s Department of Antioquia on 1,775 acres, including the Coco Hondo and Angostura properties (the “Zaragoza Project”). MGOL believes that these areas combine to contain an estimated 50 million cubic meters of material.

Canadian regulators halted trading on Underworld Resources (TSX.V: UW) this morning, a call to the Company didn't provide a reason.  A spokesperson said until the news was released they would not disclose that information, though Kinross Gold (NYSE: KGC; TSX: K) announced that it was acquiring Underworld Resources at an implied price per share of $2.62, a 34% premium to its price.