Gold demand improves on price drop

Gold demand in India, the world's biggest consumer, saw a modest pick-up on Tuesday as a 2% price correction from last week's record high lured buyers, although some were waiting for a much steeper fall.

The most-traded gold contract for October delivery was down 0.37% at Rs 31,693 per 10 grams by 3:14 p.m. It had hit a record high of Rs 32,421 last week.

"Demand was higher than yesterday. Jewellers were making purchases for the festival season," said a Mumbai-based dealer with a state-run bank.

"Still, large-scale buying is not happening. Ahead of festivals jewellers usually ramp up purchases, but this year so far, the season is subdued."

Spot gold prices in the world market eased on Tuesday after commodity markets plunged overnight and investors booked profits from a recent rally sparked by the U.S. Federal Reserve's aggressive round of stimulus efforts.

The rupee, which determines the landed cost of the dollar-quoted yellow metal, was steady on Tuesday.

India celebrates the Ganesh Chaturthi this week, which will be followed by Dussehra in October and Diwali in November.