Gold importers in India, the world's biggest buyer of the metal, continued to pay record premiums due to lack of supplies ahead of the peak festival season that starts later in the week.
India this week celebrates Dhanteras, the most significant day for buying gold. This will be followed by Diwali, when buying gold is considered auspicious. However, the new 80/20 import rule, which ties domestic consumption to exports, has resulted in supply problems for domestic jewellers.
"There is a major fluctuation in the gold rate and raw material availability is not there. For this Dhanteras, we see a 90 percent fall in demand," said Haresh Soni, chairman of the All India Gems and Jewellery Trade Federation (GJF).
Soni said premiums stayed at a record of up to $130 an ounce on prices in London gold, which traded at $1,345.85 an ounce at 1003 GMT.
In the domestic market, the most-active gold for December delivery on the Multi Commodity Exchange
(MCX) was 1.8 percent lower at 30,205 rupees per 10 grams due to a stronger rupee, easing from its seven-week high of 31,164 rupees on Monday, a level last seen on September 11.
The rupee, which firmed up on Tuesday, plays an important role in determining the landed cost of the yellow metal.
Silver for December delivery on the MCX was 0.62 percent lower at 49,254 rupees per kg.