Gold futures in India recovered on Tuesday from their lowest level in more than a week, helped by a weaker rupee with physical traders still struggling to get supplies despite paying high premiums.
The most-active gold for February delivery was 0.38% higher at Rs 28,941 per 10 gram on the multi commodity exchange, after hitting a low of Rs 28,752 earlier in the day, a level last seen on December 6.
Silver for March delivery was 0.24% higher at Rs 45,437 per kg.
The rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, was down on Tuesday.
In the domestic market, buying remained subdued due to non-availability of stocks, supporting premiums.
"Most of the demand is being met by recycled gold... We don't prefer paying high premiums to MMTC," said Kumar Jain, vice-president gold importof the Mumbai Jewellers Association.
MMTC is a state-run gold importer.
Indian gold imports may fall 70% in the final quarter of 2013 from 255 tonnes in the year-ago period and are expected to be half the usual levels at 500-550 tonnes next year if new import rules are maintained, a top trade body official said.
To curb a rising trade gap, the Indian government slapped a record import duty of 10%, and tied imports for domestic consumption with exports.
{{/usCountry}}To curb a rising trade gap, the Indian government slapped a record import duty of 10%, and tied imports for domestic consumption with exports.
{{/usCountry}}India will keep a tight leash on gold imports despite a recent improvement in its trade deficit and lobbying by a bullion industry struggling with high premiums and a supply crunch.