India gold rose on Tuesday to the highest in more than a week, on a weak rupee, while demand in the local spot market remained moderate as despite the price rise consumers were buying for a key festival, dealers said.

The most-active gold for December delivery on the Multi Commodity Exchange was 0.17 percent higher at 26,708 rupees per 10 grams, after rising 1.18 percent in the previous session. Earlier in the day, the contract hit a high of 26,853 rupees, the highest level sine Oct. 4.

The rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, erased all early gains to turn weaker in afternoon trades on Tuesday as dollar demand emerged from oil companies.

People were buying as the key festival is just two weeks from now. But many consumers still think there is scope for downside and they were waiting for correction, said a Mumbai-based dealer with a private bank.

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.

International spot gold prices fell 1 percent in Europe on Tuesday as the dollar's recovery versus the euro prompted buyers to cash in some of the previous day's more than 2 percent gains.

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