Gold Falls From One-Month High as India Adds Import Rule

Bloomberg, (23/7) -- Gold futures fell from a one-month high as India, the world’s largest buyer, added to restrictions on imports. The Reserve Bank of India said yesterday it would be mandatory for gold buyers to set aside 20 percent for re-exports as jewelry in a bid to cut a record current-account deficit. The country has doubled a tax on inbound shipments to 8 percent this year. Imports may tumble 63 percent to 175 metric tons in the second half from a year earlier, said Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation. “The restrictions on Indian imports is a further blow to physical demand,” Marc Ground, a commodity strategist at Standard Bank Plc in Johannesburg, said in a telephone interview. “Gold continues to remain vulnerable to the downside.” Gold futures for December delivery fell 0.2 percent to settle at $1,335.20 an ounce at 1:39 p.m. on the Comex in New York. Yesterday, the price jumped as much as 3.6 percent to $1,340.50, the highest for a most-active contract since June 20. The metal has climbed 13 percent from a 34-month low of $1,179.40 on June 28 as demand for coins, bars and jewelry increased following the slump. Yesterday, futures jumped 3.3 percent, the most in 12 months, on speculation that the Federal Reserve will maintain economic stimulus. “Market participants are locking in some profits following yesterday’s surge,” Tom Hungerford, a sales representative at Heraeus Metals New York LLC, said in a report. “Medium term, we expect that gold prices will decline further given our U.S. economists’ forecast for improving economic activity and a less accommodative monetary policy stance,” Goldman Sachs Group Inc. said yesterday in a report.