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New Delhi: Gold prices plunged by Rs 1,100 to Rs 71,700 per 10 grams in the national capital on Tuesday due to weak demand from jewellers.
The precious metal had closed at Rs 72,800 per 10 grams in the previous session.
Silver also continued its slide for the fourth session, plummeting by Rs 2,200 to Rs 82,000 per kg on Tuesday from Rs 84,200 per kg in the previous trade, according to the All India Sarafa Association.
Silver prices have fallen by Rs 4,200 per kg in the four sessions since August 2 when it traded at Rs 86,000 per kg.
In addition, gold of 99.5 per cent purity dived Rs 1,100 to Rs 71,350 per 10 grams from Monday's closing at Rs 72,450 per 10 grams.
Traders said gold prices dropped due to reduced demand from jewellers and retail buyers.
According to Dilip Parmar, Research Analyst at HDFC Securities, the weakness in the rupee and physical demand ahead of the festive season is expected to support domestic gold prices.
The global uncertainty, central bank’s demand and lower interest rates bode well for gold prices, Parmar said.
In the international markets, gold at Comex dropped by $20 to $2,409 per ounce.
"Gold fell more than 1 per cent on Monday, caught in the slipstream of a global, wider market sell-off driven by mounting economic worries and Yen carry trade unwinding, however geo-political tensions and rate cut expectations are cushioning the prices.
"BOJ had a negative interest rate for more than 18 years, and a sudden increase in interest rate reduced the rate differential between Japan and the US, influencing a carry trade unwinding, and increasing pressures in major asset classes," Manav Modi, Senior Analyst of Commodity Research at Motilal Oswal Financial Services, said.
On the other hand, a softer dollar also aids metal markets, as a swathe of weak US economic readings saw traders pricing in greater reductions in US interest this year. Further, weak economic data from the US, spooked market participants and increased concerns that the US could be slowing faster than initially expected, Modi added.
Silver was also trading lower at $26.94 per ounce in New York.
"Comex Gold (December) futures dropped amid a volatile trading environment that reflected a broader market sell-off across various asset classes. Financial markets have begun pricing in a potential US recession, with expectations of an interest rate cut by the US Federal Reserve (Fed) in September, following disappointing manufacturing and employment reports.
"Gold prices rebounded, closing the session above $2,440 per ounce on Monday, supported by a weak US dollar and softer Treasury yields," Kaynat Chainwala, AVP-Commodity Research at Kotak Securities, said.