MUMBAI, July 17 (Reuters) - Physical traders of gold in India preferred to stay on the sidelines ahead of next month's festival season as prices extended gains for another session in tandem with global trends, though a stronger rupee kept the upside in prices limited. * At 0834 GMT, the most-active gold for August delivery on the Multi Commodity Exchange (MCX) was 0.18 percent higher at 29,334 rupees per 10 grams, building on the previous session's gains. * In the overseas market, investors waited for Federal Reserve chairman Ben Bernanke's Congressional testimony which is expected to provide clues on the probability of further monetary easing. * The rupee, which strengthened on Tuesday, plays an important role in determining the landed cost of the dollar-quoted yellow metal. * India's festival season will start in August and continue till November. Weddings also take place during this period. * "Demand is very poor... I don't see demand recovering this year due to high prices," said Mayank Khemka, managing director, Khemka Group, a Delhi-based wholesaler. * Gold imports could pick up in the second half of the year if prices ease, but annual volumes will still fall 30 percent after a tax increase that could crimp demand. * Silver futures also traded higher following the yellow metal. * The most-traded silver for September delivery on the MCX was up 0.32 percent at 52,914 rupees per kg. * At 1:15 p.m., following were the prices in rupees quoted by HDFC Bank in the spot market : Tuesday Monday ========================================= Gold .999/10 grams 29,540 29,485 Silver .999/kg 53,600 53,210 At 1:33 p.m., following were the prices in rupees on the Multi Commodity Exchange of India Ltd <0#MAU:>: Contract Current price Net change ============================================= Aug gold 29,345 +65 July silver 52,932 +187

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