Prices of gold futures have dropped on Wednesday, a day after India announced it will be imposing restrictions on its imports of the safe haven yellow gold metal.

From Tuesday's recorded $1,340.50 an ounce, prices of gold futures for December delivery immediately reacted on Wednesday, dropping by 0.2 per cent to $1,335.20 an ounce at 1:39 p.m. on the Comex in New York.

On Monday evening, the Reserve Bank of India (RBI) mandated that 20 per cent of all gold imports must be made available exclusively for export purposes.

"The restrictions on Indian imports is a further blow to physical demand," Marc Ground, a commodity strategist, told Bloomberg News. "Gold continues to remain vulnerable to the downside."

RBI's pronouncement is the latest of measures aimed to reduce the current account deficit of India, which is the world's largest gold-consuming nation. Earlier, the government raised the duty on gold imports to 8 per cent for this sole purpose.

"The main aim of RBI, through this recent measure, is to restrict import, limit all gold coin and other transactions through jewellery shops only and prevent banks and non-banking financial companies from entering this arena," C P Krishnan, whole-time director, Geojit Comtrade, was quoted by Business Standard.

"The move is likely to generate more interest in refining from scrap gold, which is available in a huge quantity in India."

He added that as far global prices for the safe haven yellow gold metal go, it will find resistance around the $1,350 an ounce levels.

"I expect the prices to scale back and one can enter at sub-$1,300 an ounce levels," noting gold's medium- to long-term trajectory will depend on the US Federal Reserve's plans over its "quantitative easing withdrawal play out."

"I don't expect prices to gallop from here on. They will remain in a trading range of $1,250-1,350 an ounce," he adds.