Gold fell in Europe on Friday after China’s central bank raised lenders’ reserve requirements by 50 basis points, with softer haven demand for the metal after solid bond sales by Portugal and Spain also weighing on prices.But physical demand for gold in Asia is still likely to underpin the precious metal, analysts said, with Chinese buyers moving into the market ahead of the Lunar New Year in February.Spot gold was bid at $1,368.45 an ounce at 5:47 a.m. ET, against $1,372.75 late in New York on Thursday, having earlier hit a low of $1,365.33. U.S. gold futures for February delivery fell $18.80 an ounce to $1,368.20.China’s central bank raised lenders’ required reserves for the fourth time in just over two months on Friday, making good on its vow that inflation fighting will be a top priority for the year.Gold is sometimes seen as a hedge against rising inflation, and also benefits widely from a low interest rate environment."China’s move of course has consequences for the gold market, but it is not (just) China that is playing a role," said Peter Fertig, a consultant at Quantitative Commodity Research. "After yesterday’s ECB conference the market is also concerned that the ECB might hike rates earlier than previously assumed."The European Central Bank said on Thursday that the euro zone faces short-term price pressures which may linger, showing it could raise interest rates to contain inflation even while the bloc is gripped by a debt crisis."Also bond auctions for Portugal, Spain and Italy went well, credit default swaps are declining, and spreads over German bunds are falling, which indicates there is less reason to be concerned about the euro zone debt crisis," Fertig added."Investors are moving again out of safe havens into more risky assets, which also weighs on gold," he said.The euro earlier hit a one-month high against the dollar and the Swiss franc after tough talk on inflation from the European Central Bank and an easing of debt worries after solid bond sales by Portugal and Spain.The European currency shed gains after China’s announcement, but quickly crept higher once again. Nonetheless, gold prices have struggled to mirror its strong performance."Gold’s inability to follow the euro/dollar higher can be attributed to this week’s successful auctions in the euro zone periphery, and the associated dampening of sovereign debt concerns," said UBS analyst Edel Tully in a note.Worries over certain euro zone countries’ debt levels can work two ways for gold, lifting prices as investors choose gold as a haven from risk, but weighing on them via the pressure they exert on the euro.Traders in Asia reported strong physical gold buying, particularly from China, on Friday, but large bullion-backed exchange-traded funds continued to see outflows.Holdings of the world’s largest gold ETF, New York’s SPDR Gold Trust, fell by more than 6 metric tons on Thursday and are down more than 15 metric tons so far this year.Among other precious metals, spot silver was bid at $28.60 an ounce against $28.67.The gold:silver ratio -- the number of ounces of silver needed to buy an ounce of gold -- rose to a one-month high on Friday at just below 48, showing that silver, as is typical, is underperforming gold in a falling market.