Gold update's

Domestic gold futures are trading lower as the Union government is considering raising the cost of gold imports.

Finance Minister P Chidambaram said today that India is considering raising the cost of gold imports, as part of efforts to curb the country's current account deficit, which widened to a record high of 5.4 per cent of GDP in the September quarter.

Imports in India, world's biggest gold market revived in the July-September quarter, with increase in demand. Imports surged 9% at 223 tonnes in the third quarter against 205 tonnes in Q3 of 2011, according to data compiled by the World Gold Council. This is in contrast to a decline of more than 50% in the first half to June as doubling of import duty and record high prices dented sales.

A sharp rise in gold imports, a hefty oil bill and falling exports due to the global slowdown have kept India's current account deficit at persistently high levels.

MCX February gold futures are trading down Rs 50 at Rs 30828 per 10 grams. The counter is expected to face a resistance near Rs 30900 levels in the near term.

However, the international gold futures cheered the news that Congress passed the fiscal cliff deal and saved US from falling back into recession. Both the U.S. Senate and House of Representatives approved a bipartisan deal to block most impending tax increases and postponed spending cuts.

February dated COMEX gold futures jumped above $1680 an ounce helped by the sharp fall in the US dollar after the passage of cliff deal by Congress.

The US dollar tumbled sharply after the House of Representatives passed a bill to undo much of the fiscal cliff threatening the U.S. economy. After trading at 79.792 late Monday in North America, the ICE dollar index had fallen to 79.460 by Wednesday afternoon in Asia.

The vote to undo the fiscal cliff, which economists believed could have thrown the U.S. back into recession, helped spur buying of currencies seen as riskier, such as the euro. Euro was changing hands at $1.3267, up from $1.3197 late Monday.

The Japanese yen took an even sharper fall than did the greenback. The dollar rose to ¥87.17 from Monday's ¥86.76, sitting at levels not seen since July 2010.

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