India gold rose nearly a percent on Monday afternoon, extending gains for another session, following a similar trend in overseas markets, although a rising rupee checked gains, dealers said.

The most-active gold for December delivery on the Multi Commodity Exchange was 0.91 percent higher at 26,591 rupees per 10 grams, after gaining a tad on Saturday.

Global gold prices rose 1 percent, reversing a decline in the previous session, after the leaders of France and Germany promised to unveil new steps by the end of the month to resolve the euro zone's debt crisis.

The rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, nudged higher as firmer shares raised hopes for foreign portfolio inflows and sentiment was underpinned by the euro's gains.

Demand for the yellow metal remained moderate as prices rose further and premiums fell to $1.5 an ounce after peaking at $3 a few weeks ago.

Demand is sort of moderate as prices have risen, said Mayank Khemka, managing director, Khemka Group, a gold bullion wholesaler in Delhi. People have bought in at lower rates, when prices were below $1,600 an ounce.

Gold demand is likely to gain pace and will peak with Diwali and Dhanteras festivals slated later in the month. Weddings also take place during this period.

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