Limits were restricted to 25% of physically settled contracts for the spot month, meaning the month of expiration. According to initial estimates, this provision would likely impact just a handful of large position traders, but the CTFC did not vote on the rule, saying the commission needed more time to digest it.

Not only might this spur traders to look overseas but it might make them resistant to commit new capital until the rule is finalized. Gold prices could also get hit with a "buy on the rumor, sell on the news" trading strategy once limits are official approved.

Another potential headwind for gold is a slowdown of physical buying in India. Nadler says that rural consumers, who usually buy gold as a store of wealth will now opt for durable goods like appliances and cars. About "200 to 250 tons per annum is at stake here," Nadler estimates, "China better step up to the buying plate."

Also according to reports, India's wedding season, which starts in September and usually lasts for three months, is has been weak. The season is typically met by strong gold jewelry buying and the lack of demand could put some pressure on prices for the short term.

Silver prices will take a hit off of slumping Indian demand as well as consumers has been opting for a mix of gold and silver jewelry to help offset the cost. But silver is in luck in that it is used in many of the now-sought appliances and technology items. Silver added 35 cents to $29.13 while copper closed up 4 cents to $4.15.

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Gold mining stocks, a risky but potentially profitable way to buy gold, were mixed Friday. Kinross Gold ( KGC) was down 0.49% to $18.19 while Goldcorp ( FCX) was 0.96% lower at $44.54. Other gold stocks New Gold ( NGD) and Gold Fields ( GFI) were trading at $9.32 and $17.80, respectively.

>> Video: 3 Winning Gold Stocks for 2011

The popular gold exchange-traded fund, SPDR Gold Shares ( GLD), were trading slightly higher at $134.41 after the ETF shed almost 3 tons Thursday.

-- Written by Alix Steel in New York.

>To contact the writer of this article, click here: Alix Steel.

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