March 16, 2012 / 2:48 AM / 7 years ago

PRECIOUS-Gold gives up early gains on India's import duty hike plan

* India plans to double basic customs duty on gold
    * Coming Up: U.S. consumer prices Feb; 1230 GMT

 (Recasts, adds India's duty proposal)	
    By Lewa Pardomuan	
    SINGAPORE, March 16 (Reuters) - Gold ticked lower in volatile trade on
Friday, heading for a third straight week of losses as a brightening economic
outlook in the United States prompted investors to park their money elsewhere,
while India's plan to double the import duty on bullion erased some early gains.	
    But physical dealers also noted panic buying from India, the world's largest
gold consumer, after Finance Minister Pranab Mukherjee proposed to double to
four percent the customs duty on gold from April, the start of the 2012/13
financial year. 	
    Gold hit an intraday high of $1,664.40 an ounce before slipping to	
$1,655.69 by 0818 GMT, down $2.04. 	
    "In fact India is buying today, although of course the volume is not great,"
 a dealer in Singapore said. "I am not sure if the drop in prices is related to
the announcement. But the thing is that the Indians are buyers today." 	
    In January, India raised the gold import duty 90 percent and doubled the tax
on silver as the government grappled with a burgeoning fiscal deficit and looked
to increase revenues. Increasing outlays that include subsidies for fuel and
food have left the coalition government struggling to meet its fiscal deficit
    "Well, if the budget is getting through, then they will have to buy gold
now," said another dealer in Singapore.	
    Dealers said a 7 percent drop in gold prices since late February could also
spur buying from jewellers in other regions. Gold hit a low of $1,634.09 on
Wednesday, its weakest since Jan. 16, on fading expectations of more monetary
easing in the United States, which reduces the money available to buy safe-haven
    "There's little need for a safe haven at the moment," said Lynette Tan, an
analyst with Phillip Futures in Singapore. "Going forward, we could see gold
maintained at this level, or even fall to about $1,620. I think gold will be
sidelined at the moment, compared to the other risk assets." 	
    Bullion, which was heading for its longest weekly losing streak since early
October, struck a record of around $1,920 last September on fears the euro debt
crisis could stall global growth.  	
    U.S. April gold fell $3.60 to $1,655.90 an ounce, also erasing early
    The dollar took a breather on Friday after investors booked profits on
recent gains, but dealers said the uptrend could resume after the latest U.S.
data gave further support to the view the recovery in the world's biggest
economy was becoming more self-sustaining.  	
    "Gold still appears to be taking a hit and, if it is to escape the downward
trend in the short term, it will have to overcome the price resistance at 
$1,726 per ounce," said Heraeus in a report. "Only then will it begin moving up
    Dealers awaited the release of the U.S. CFTC commitment of traders weekly
data at 1930 GMT, which reflects investors' sentiment on gold. Net long futures
positions held by speculators fell 20 percent in the week up to March 6, the
biggest drop since August 2010.	
    Platinum was still at a premium to gold because of supply worries.	
A month-long stoppage at the largest facility of Impala Platinum, the
world's second-largest producer, is expected to cost nearly 200,000 ounces in
production and would probably cut deliveries in April by as much as half. 	
    Among equities, the Nikkei average ended up for the fourth straight day on
Friday as investors picked up cyclical shares on the brightening U.S. economic 	
outlook, offsetting profit-taking in exporters that have rallied in recent
sessions on the softer yen. 	
  Precious metals prices 0818 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1655.69   -2.04   -0.12      5.88
  Spot Silver        32.55    0.05   +0.15     17.55
  Spot Platinum    1682.00    2.12   +0.13     20.75
  Spot Palladium    700.22   -0.83   -0.12      7.31
  COMEX GOLD APR2  1655.90   -3.60   -0.22      5.69        24321
  COMEX SILVER MAY2  32.58   -0.15   -0.45     16.71         4171
  Euro/Dollar       1.3071
  Dollar/Yen         83.57
  COMEX gold and silver contracts show the most active months
 (Editing by Clarence Fernandez)
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