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India's gold imports in February dropped a quarter from a year ago to 63 tonnes as higher prices curtailed demand in the world's second-biggest consumer of bullion, provisional data from precious metals consultancy GFMS and bank dealers showed.
The drop in purchases by India, though, could weigh on global prices, which are still up nearly 8 percent from a mid-December trough, despite dropping back from a 17-month high hit at end-January.
Lower gold imports could also help the South Asian country reduce its trade deficit, which rose to the highest in more than 4-1/2 years in January.
The increase in gold prices has curbed local retail demand, which was already suffering as there weren't any big festivals last month, Sudheesh Nambiath, a senior analyst with GFMS, a division of Thomson Reuters, said on Wednesday.
India imported 84 tonnes of gold in February 2017.
Local gold prices jumped to their highest in 15 months in mid-February following the gains in the overseas market and as the rupee weakened.
"In March, exports will rebound," said the Mumbai-based head of the gold trading desk with a private bullion importing bank.
"For two straight months imports have been lower than last year. Supplies are limited in the market," he said.
In January, imports fell 14 percent from the same month the previous year to 41.3 tonnes.
In March, imports could rise back above 80 tonnes due to Akshay Tritiya festival next month, a gold dealer with a separate private bank said.
Indians will celebrate Akshay Tritiya festival in mid-April, when buying gold is considered auspicious.
"Wedding season will pick up from next month. That will also boost demand," the gold dealer said.