Gold traders in India, the world's biggest buyer of the metal, struggled to get supplies from importing agencies, to cover a small rise in demand triggered by a fall in prices to their lowest level in a month.
In a bid to contain the record current account gap, the government banned consignment imports, making it difficult for smaller jewellers with lower working capital to source supplies. The government also raised the import duty to eight per cent.
"It's very difficult to get supplies... there is a little demand," said Haresh Acharya, head of bullion desk at Parker Bullion, which has reduced purchases to 200 kg a week from a similar quantity per day before the curbs were imposed.
Premiums stayed steady at up to $20 an ounce on London prices, traders said.
Most of the supplies were being met by privately held trading houses and state-run agencies such as MMTC, State Trading Corp, and PEC through imports in April and early May as banks await guidelines from the central bank on outright cash purchases.