Gold importers in India, the world's biggest buyer of the metal, kept to the sidelines on Tuesday as prices recovered partly from the lowest level in seven months hit last week, and on a liquidity crunch ahead of the closing of the financial year next month.
As of 3:24 p.m., the actively traded gold for April delivery on the Multi Commodity Exchange (MCX) was 0.52 percent higher at 29,777 rupees per 10 grams. The contract hit a seven-month low of 29,263 rupees last week.
Local gold prices rose following gains in the world market and on a weak rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal.
In the overseas markets gold rose after Italian elections rocked global markets, with no party or coalition winning a majority in the Senate, fuelling worries of a split parliament and power vacuum in the euro zone's third-largest economy.
"Demand is weak as liquidity is tight before March end," said Prithviraj Kothari, director with RiddiSiddhi Bullions Ltd, a wholesaler in Mumbai.
India's fiscal year starts on April 1 and ends on March 31.
Market participants feel that there could be another round of hike in import duty on refined gold to 8 percent from the earlier 6 percent to keep a lid on the rising current account deficit.