Gold down as India raises import tax to 10%

Gold gave back some of Monday’s gains as the Indian government raised the import tax on the yellow metal for the third time this year, from 8% to 10%, in an effort to curb imports and reduce the country's trade deficit.

The measures come ahead of the country’s wedding season, which peaks with the Diwali festival in November and tends to mark a spike in gold purchases.

India also increased the import tax on silver to 10% from 6%.

Gold futures for December delivery dropped 0.6% to $1,325.90 an ounce at 10:45 a.m. ET on the Comex in New York, after reaching $1,343.70 yesterday.

India’s current account deficit is nearly 5% and gold is a major driver behind that figure, second only to oil.