The primary dealers of bullion in India struggled to keep pace with robust demand quoting higher premiums, even as prices recovered partially from their lowest level in more than 18 months.
India, the biggest buyer of gold, has been trying to limit imports to keep a lid on record current account deficit, and the economic advisory council expects the country to import $45 billion tonnes of the yellow metal in the year to March 2014.
"We are unable to get supply as refiners have sold out till second or third week of May. Gold for immediate delivery is quoted at $10 on London prices," said a dealer with a state-run bank. "Supply could return to normal within 20 days."
Most of the jewellers have been stocking for Akshaya Tritiya, the second biggest gold buying festival after Dhanteras, and weddings, which will continue until July. Most of the gold bars get imported in India through foreign banks, which has an agreement with the miners.
At 2:55 p.m., the actively traded gold for June delivery was 302 rupees higher at 26,690 rupees per 10 grams, after hitting a high of 26,700 rupees earlier in the day.
Overseas gold climbed to its highest in more than a week on Thursday, boosted by prospects of more RBI buying after a recent steep sell-off in the precious metal.
The rupee, which climbed on Thursday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.
Silver for May delivery the MCX was 442 rupees higher at 43,326 rupees per kilogram.