Gold futures were lower Friday on India's proposal to raise gold import taxes and on lower-than-expected U.S. inflation data.
The most-actively traded contract, for April delivery, was recently down $7.60, or 0.5%, at $1,651.90 U.S. a troy ounce on the Comex division of the New York Mercantile Exchange.
India, the world largest consumer of gold, proposed to double the import duty on gold to 4%, stoking bearish sentiment among traders and sparking concern about lower demand for the metal.
India's annual gold demand could fall more than 30% to 600 tons after the tax increase and local prices could rise by around INR500 per 10 grams, said Prithviraj Kothari, president of the Bombay Bullion Association.
Gold prices, which have struggled to stem their declines in recent days, retreated on the news.
"Physical demand for the metals has been lacking of late and this duty increase will not help buying from such an important consumer/hoarder of gold and silver," said traders at TD Securities.
The U.S. consumer-price index, which measures how much Americans pay for everything from cereal to medical expenses, increased a seasonally adjusted 0.4% in February from the prior month, the biggest rise since April 2011. However, the data missed expectations of a 0.5% increase.
