August gold declines after rising to four-month high on lack of duty cut.

MUMBAI: Gold for August delivery on MCX, which reflects the spot rate excluding 1% VAT, traded down three-fifths of a per centage point at Rs 28,325 per 10 gm at noon on Friday. It had risen to a four-month high a day earlier after India kept import duty on the metal intact at 10% and the US Federal Reserve remained silent about a likely interest rate increase in the release of its minutes for June recently.

The MCX futures had priced in a 2% duty cut and rose to the four-month record of Rs 28,589 after this failed to materialise in the budget for FY15. However, prices corrected on Friday because of lack of demand for the metal from consumers. Gold is expected to trade in a Rs 28,000-28,500 range in the near short term.

"The non-reduction in import duty will continue the grey market trade because of availability of arbitrage between the duty factored rate and the unofficial one," said Vijay Jain, MD, Orra.

Source : economictimes.indiatimes.com