On Monday, the precious metal had closed at Rs 41,456 per 10 gram.
Silver prices also dropped by Rs 657 to Rs 47,870 per kg from the previous close of Rs 48,527 per kg.
"Spot gold for 24 Karat in Delhi fell by Rs 162 pressured by rupee appreciation. The spot rupee was trading around 11 paisa stronger against the dollar during the day," HDFC Securities Senior Analyst (Commodities) Tapan Patel said.
In early trade on Tuesday, the rupee appreciated by 6 paise to 71.37 against the US dollar.
In the international market also, both gold and silver were trading lower at USD 1,579 per ounce and USD 18 per ounce, respectively.
"Global investors are weighing the effect of China's coronavirus outbreak," he added. SUM SHW SHW