"There was good buying for over 3-4 days, but sales are lagging as prices crossed $1,200 (an ounce)," said a dealer with a state-run bullion dealing bank in Mumbai.

International gold was trading at $1,202.65/1,203.15 an ounce as against the previous close of 1,201.85/1,202.85, recovering from a six-week low of $1,185.05 struck on Wednesday.

"There could be more buying if prices move to $1,190 an ounce," said another dealer with a private bank.

However, a strong rupee, which makes the dollar-quoted asset cheaper, kept the upside limited for domestic prices.

The Indian rupee rose, supported by a rise in local share prices and the euro's strength overseas triggered dollar-selling from exporters. [INR/]

Traders have been stocking the yellow metal for the upcoming festivals, when demand for bullion goes up.

India, which accounts for more than 20 percent of global demand, will celebrate the Hindu festival of Raksha Bandhan on Aug 24, and Janmasthami and Ganesh Chaturthi in September.