Earlier in the week, the Reserve Bank of India (RBI) tightened gold imports, making shipments dependent on export volumes, in a bid to reduce a record current account deficit.
"There is a little demand but there are no supplies," said Haresh Acharya, head of bullion desk, Parker Bullion, a wholesaler in Ahmedabad, adding traders quoted premiums of $20 an ounce.
In the next six months, India may be allowed to import 175 tonnes of gold, said Bachhraj Bamalwa, a director at the All India Gems and Jewellery Trade Federation.
Out of 175 tonnes, 35 tonnes will go for exports and the remaining 140 tonnes will be made available for domestic jewellery making, about 66 per cent lower than its average consumption, Mr Bamalwa said.
At 3:23 p.m., the actively traded gold contract for August delivery on the Multi Commodity Exchange (MCX) was 0.01 per cent lower at Rs 27,400 per 10 grams. The contract traded near Wednesday's high of Rs 27,716, the highest level in more than a month.
Silver contract for September delivery on the MCX was 0.84 per cent lower at Rs 41,090 per kg.