Gold fell Friday, capping a weekly decline, after India increased the tax on imports of precious metals for the second time this year. India, the world's biggest bullion buyer, will tax gold bars and coins and platinum at 4 per cent from April 1, up from 2 per cent, Pranab Mukherjee, the finance minister, said in his budget speech Friday.
There was no change in the tax on silver. Prices slumped last week after the Federal Reserve raised its economic assessment on March 13 and said the labour market is improving, damping expectations that it will buy more government debt.
"The market is reacting to the news out of India," Jon Nadler, an analyst at Kitco Inc in Montreal, said in a telephone interview. "This will push prices down." Gold futures for April delivery fell 0.2 per cent to settle at $1,655.80 (Dh6,076.78) an ounce on the Comex in New York, capping a 3.3 per cent decline for the week. Prices still are up 5.7 per cent this year.
"The Indian market will wait for lower prices, and there is also the risk that this duty hike will lead to increased smuggling," Edel Tully, an analyst at UBS in London, said by email, in response to questions from Bloomberg News. The duty increase will damp Indian demand." Silver futures for May delivery dropped 0.4 per cent to close at $32.604 an ounce on the Comex. The metal slumped 4.7 per cent last week, its third straight loss and the biggest since December. On the New York Mercantile Exchange, palladium futures for June delivery retreated 1.2 per cent to $701.70 an ounce.