Gold buying in India, the world's biggest buyer of the metal, came to a halt on Tuesday, a day after the central bank restricted gold imports on consignment basis and jewellery sellers saw a sharp rise in festival sales.
On May 13, the Reserve Bank of India (RBI) banned gold imports through consignment, and traders awaited for more clarity from the central bank. Gold and silver imports rose 138 percent in value terms to $7.5 billion, data from the trade ministry showed, increasing pressure on the current account balance.
"People are squaring off their older consignments, we are not accepting new orders... we will wait and watch until guidelines from the RBI," said a dealer with a private bullion importing bank.
The central bank said the measure is aimed to moderate demand for the yellow metal, but banks should meet the genuine needs of gold jewellery exporters.
The most-actively traded gold for June delivery on the Multi Commodity Exchange (MCX) was 0.22 percent lower at 26,795 rupees per 10 grams, weighed by a stronger rupee.
The rupee, which fell on Tuesday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.
Silver for July delivery on the MCX was 0.99 percent lower at 44,670 rupees per kilogram.