India's gold demand was lacklustre on Tuesday as prices hit their highest level in a week, helped by a weaker rupee, which made the dollar-quoted yellow metal expensive, dealers said. "Deals are very limited today. We haven't seen big transactions so far," said a dealer with a state-run bank in Mumbai, which deals in bullion.

At 1:07 p.m., the December gold contract on the Multi Commodity Exchange (MCX) was trading 0.52% higher at Rs 20,243 per 10 grams, after hitting a high of Rs 20,275 , a level last seen on Nov. 15. "Anything below Rs 20,000 could help demand," said another dealer with a private-run bullion importing bank.

The Indian rupee dropped to fresh two-month lows, weighed down by losses in domestic shares and as the dollar strengthened against major currencies. The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.

India, the world's largest consumer of bullion, is in the midst of the wedding season, which accounts for about 70% of total demand, the World Gold Council (WGC) said. In the quarter to September, India imported 214 tonnes of gold, up 21.6% on year, the WGC said.