Gold traded steady on Tuesday afternoon, though traders took to the sidelines awaiting price falls amid a lack of supplies, dealers said.
"There are hardly any buyers today. Yesterday I covered for more than 125 kgs at $1,323.80 (an ounce)," said a dealer with a state-run bullion importing bank in Mumbai.
Gold for February delivery on the Multi Commodity Exchange (MCX) was trading 0.12% higher at 19,945 rupees per 10 grams at 1:40 pm.
Dealers said the supply constraints could ease, after raising premiums to more than $2 per ounce over London prices, a level last seen in Oct. 2008.
"After the Chinese new year (Feb 3), probably the supply issue could get solved," said another dealer with a state-run bullion dealing bank.
India's January gold imports are seen rising on softer prices and as food inflation boosts farm incomes, fuelling demand for gold in the world's biggest market for the metal.
The median forecast in a Reuters poll of 10 industry experts showed gold imports this month may have risen 6.6% from a year earlier to 36.25 tonnes.
The winter harvesting season is underway in India and is expected to leave more disposable income with rural households, which contribute significantly to gold demand.
In India, which accounts for 20% of global demand for jewellery, gold is widely gifted in religious celebrations and weddings.
Following were the prices being quoted by HDFC Bank in rupees in the spot market at 1:15 pm:
Gold .999/10 grams 20,155 20,160
Silver .999/kg 44,620 44,242
Following were prices in rupees on the Multi Commodity Exchange of India Ltd at 1:41 pm:
Contract Current price Net change
Feb gold 19,948 +26
Mar silver 43,550 -90