At 0948 GMT, the most-actively traded gold for February delivery on the Multi Commodity Exchange (MCX) was 0.13 percent lower at 29,120 rupees per 10 grams. The contract earlier hit a high of 29,266 rupees, a level last seen on Dec. 16.
Silver for March delivery on the MCX was 0.6 percent lower at 45,200 rupees per kg.
The rupee, which weakened on Monday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.
"We are declining orders as goods are not available... even if there is some quantity, they are quoting a high premium," said Harshad Ajmera, proprietor of JJ Gold House. Trading agencies were quoting a premium of $130 an ounce on London prices, he added.
Indian gold imports may fall 70 percent in the final quarter of 2013 from 255 tonnes in the year-ago period and are expected to be half the usual levels at 500-550 tonnes next year if new import rules are maintained, a top trade body official said.
To curb a rising trade gap, the Indian government slapped a record import duty of 10 percent, and tied imports for domestic consumption with exports.