Indian gold futures extended declines on Thursday afternoon by more than 4 percent to hit their lowest level in more than two weeks but in the domestic market a seasonally slack demand period outweighed the fall in price. Silver fell more than 5 percent.
The actively traded gold for August delivery on the Multi Commodity Exchange (MCX) was 3.79 percent lower at 26,950 rupees per 10 grams, after hitting a low of 26,890 rupees, a level last seen on June 3.
"I have not been receiving calls from traders. Demand is still lukewarm compared with what we saw in April... The rupee price of gold is higher compared to what it was in the month of May," said a dealer with a private bullion-importing bank.
Demand offtake revives in August as the festivals and weddings season starts again.
Gold imports into India, the world's biggest buyer of the metal, fell from an average of $135 million in the first half of May to $36 million in the second half, Finance Minister P. Chidambaram said.
India has ruled out a blanket ban on gold imports or any increase in customs duty from the current 8 percent.
Silver for July delivery on the MCX was 5.67 percent lower at 41,465 rupees per kilogram, after touching a low of 41,317 rupees.