With the festival season nearing and the gold prices slightly falling, gold traders have returned to the bullion market and started stocking up the metal for the coming festival demand.
Good fall in prices has led to good demand. There were deals at all levels from $1,200/1,190/1,186 (an ounce).
International gold came under pressure as the euro fell and investors fretted over signs of deflation in the United States and renewed concerns over the eurozone's debt problems.
International gold was trading $1,191.45/1,912.45 an ounce on Monday as against the previous close of $1,193.10/1,194.10, extending Friday's more-than-1 per cent fall, when gold hit its lowest level in more than one week.
However, a weaker rupee, which makes the dollar-quoted asset expensive, weighed on the sentiment.
The Indian rupee slipped to a two-week low, weighed down by choppy stocks and a halt to the euro's rally against the dollar.
India, which accounts for more than 20 percent of global demand, will celebrate the Hindu festival of Raksha Bandhan on August 24, and Janmasthami and Ganesh Chaturthi in September.
The world's largest consumer of bullion may import 500-550 tonnes of gold in 2010, up from 480-490 tonnes a year earlier.