Gold extends drop on slower India, China demand

Gold fell for a fifth day in New York, heading for the longest losing streak since 2009, on prospects for slower demand in India and China, the world\'s two biggest consumers of bullion. Indian imports of the precious metal may drop as much as 50 per cent this month after the rupee plunged, said the Bombay Bullion Association. China restricted spot and futures gold trading to the Shanghai Gold Exchange and the Shanghai Futures Exchange as part of efforts to crack down on illegal buying and selling of commodities, the People\'s Bank of China said yesterday. \"Concerns were raised over the sustainability of demand out of China and India,\" Marc Ground, an analyst at Standard Bank Plc, said in a report yesterday. February-delivery futures dropped 0.5 per cent to $1,586.90 (Dh5,829.08) an ounce by 8am on the Comex in New York. Bullion dropped to as low as $1,583, the lowest level since December 16, as it heads for the longest losing streak for a most-active contract since the five days through October 28, 2009. Gold for immediate delivery slipped 0.2 per cent to $1,589.92 an ounce in London. Bullion retreated to $1,584 an ounce in the morning \"fixing\" in London, used by some mining companies to sell output, from $1,606.50 at the afternoon fixing on December 22. Gold has dropped below the 200-day moving average and the moving-average convergence indicator has slid under its signal line, indications to some investors who study technical charts that prices may fall further. Still, futures have advanced 12 per cent this year as investors sought to protect their wealth against turmoil in financial markets stemming from Europe\'s sovereign-debt crisis. The metal is set for an eleventh year of gains, while the MSCI All-Country World Index of equities is down 9.2 per cent. Bank of Japan Governor Masaaki Shirakawa said last week the crisis is the biggest risk for the nation\'s economy. The European Central Bank said last Wednesday it would lend Eurozone banks a record amount for three years in its latest attempt to keep credit flowing. \"The only solution for their problems is to print money,\" said John Stephenson, portfolio manager at First Asset Investment Management Inc. in Toronto. \"If we see that happening, that will take the final peg that\'s been holding gold back, and you\'ll see it push easily through $2,000.\"