As of 1052 GMT, the most active gold contract for April delivery on the Multi Commodity Exchange (MCX) was 0.01 percent lower at 30,190 rupees per 10 grams.

"Demand is weak from local jewellers. Investment demand is also weak. Jewellery exporters are buying, but they are also cautious," said a Mumbai-based dealer with a state-run bank.

"Most jewellers are on the sidelines. They are expecting a sharp drop in prices."

The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal. It fell on Monday.

After a 50 percent import duty increase to 6 percent on Jan. 21, the Reserve Bank of India recommended putting curbs on imports, along with launching gold-linked products to limit shipments.

India's government may further raise import duties on gold or put a cap on purchases in a bid to rein in the current account deficit in the 2013/14 budget, an official with the biggest state-run gold importer MMTC said on Monday.

The silver contract for March delivery on the MCX was 0.25 percent higher at 56,204 rupees per kg.