Gold futures slide as India looks to increase import taxes

<p>Gold futures have retreated as India is believed to be preparing to increase import taxes.</p>

Gold futures have suffered a blow in commodities trading this morning (February 21st), as India is set to increase its import taxes for the second time this year.

The country – which is the world's biggest buyer of the precious metal – is seeking to narrow a widening current account deficit, curbing demand for gold in jewellery and investment.

Buying gold is considered auspicious in India during the festival and wedding season, which lasts from August to the new year.

Indeed, imports surged by 62 per cent to 255 tonnes in the final three months of last year on expectations of higher import duties and strong demand coinciding with these occasions, according to the World Gold Council.

Finance minister Palaniappan Chidambaram – who is looking to curb the spending deficit by way of tax increases – will present India's annual budget next week.

At 11:00 GMT, the Forex Gold Index declined by more than two per cent to $1568.50 per ounce.

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