The actively traded gold for February delivery on the Multi Commodity Exchange was 0.52% lower at Rs. 30,894 per 10 grams at 0909 GMT, after hitting a low of Rs. 30,890, its lowest since December 6.
"The market is very active since yesterday evening when gold prices started dropping," said a dealer with a bullion importing private bank in Mumbai on Wednesday, adding, "Today is a busy day for us."
The rupee, which inched higher on Wednesday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.
In the overseas market, however, gold bounced back on a weaker dollar, but prices were still in sight of an almost four-month low.
Silver also fell to its lowest in two weeks following the yellow metal.
March silver also extended losses to trade 0.31% lower at 60,500 rupees per kg, after hitting a low of 60,367 rupees, a level last seen on December 5.