Gold Drops Nearly 1% to Lowest in Seven Months

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February 21, 2013 4:34 PM EST

Gold futures in India, the world's biggest consumer of the metal, fell 0.9 percent on Thursday morning to their lowest level in seven months, mirroring a similar trend overseas, though a weak rupee limited the downside.

At 10:08 a.m., the most active gold contract for April delivery on the Multi Commodity Exchange was 0.92 percent lower at 29,307 rupees per 10 grams, after falling to 29,305 rupees earlier, the lowest level since July 23, 2012.

In the overseas market, gold dropped to a seven-month low on Thursday, its third straight session of weakness, as signs that some Federal Reserve officials were reconsidering the scale and duration of the U.S. monetary stimulus programme spooked investors.

The rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, fell on Thursday.

Alarmed by the mounting current account deficit that hit a record 5.4 percent of gross domestic product in July-September, the government moved to rein in its gold imports -- second only to oil in value -- by raising the import duty on the precious metal to 6 percent from 4 percent on January 21.

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