It was said from the Bombay Bullion Association in Mumbai on Wednesday that gold imports declined by nearly 24 per cent in 2009 at 343 tonne, against 449 tonne in 2008.

“The country has imported 343 tonne gold in 2009, compared to 449 tonne in 2008,” Bombay Bullion Association President Suresh Hundia said.

India has remained the largest gold importer in the past few years, but took a hit in 2009 due to soaring prices, he said.

Commenting on price trend, Hundia said gold may see some correction and may touch Rs 16,400-16,500 per 10-gram in the near future.

The precious metal plunged Rs 245 to Rs 16,785 per ten grams at the Mumbai bullion market today on emergence of hectic offloading by stockists and speculators.

The sudden bout of selling was attributed to heavy profit-taking fearing a price correction in the overseas markets following China’s tightening of its monetary policy yesterday, a trader said.

Pure gold (99.9 purity) fell by a similar margin to end at Rs 16,870 per ten gram from Rs 17,115 previously.

It was reported that gold rose for the third time in four sessions on speculation that the Federal Reserve will hold US lending rates low for an extended period, eroding the value of the dollar.

The greenback dropped as much as 0.5 per cent against a basket of six major currencies. Gold rose 24 per cent last year as the central bank kept rates at close to zero percent to spur the economy, helping send the dollar down 4.2 per cent.

“If the Fed foolishly keeps interest rates too low for too long, money is going to flow into gold and commodities,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois.

Gold futures for February delivery rose $US7.40, or 0.7 per cent, to $US1136.80 an ounce on the Comex division of the New York Mercantile Exchange. Prices climbed as much as 0.8 per cent and dropped as much as 1 per cent.

The metal may top $US1200 in the first half of the year on demand for a hedge against inflation, said Philip Klapwijk, the chairman of London-based researcher GFMS Ltd.

In 2009, gold rallied for the ninth straight year, reaching an all-time high of $US1227.50 on December 3.

Gold imports by India, the world’s biggest buyer, fell 18 percent to 343 metric tons last year as record prices curbed demand from jewelers and housewives, the Bombay Bullion Association Ltd. said today.

“This is not the time to hold long-term positions,” Kaplan said. “Gold is still just too expensive.”

Silver futures for March delivery rose 29.5 US cents, or 1.6 per cent, to $US18.55 an ounce in New York. The metal is up 74 per cent in the past 12 months.

It was said from smelter officials on Monday that the power operator in Henan province has warned local aluminium smelters that its power supplies to the smelters may fall due to local power shortages.

“The power bureau called us on Sunday asking us to prepare for production cuts at our smelter since the local power supply is tightening,” an administration official at a large smelter in Henan told Reuters.

“I can imagine they would call others.”A manager at another large smelter in Henan said the company had received calls from the power operator on Sunday and Monday about warnings of power supply cuts.

Henan, the top primary aluminium producing province in China, has more than 4 million tonnes a year of aluminium smelting capacity.

China is the world’s top producer and consumer of the metal.

It was reported on Monday that China and Malaysia signed a deal to build large projects in a controversial development corridor in resource-rich Borneo, one of the world’s last great wilderness areas.

Najib Razak, the Malaysian prime minister, said the agreement could result in projects worth $11bn.