Gold prices dropped by Rs 4,100 to Rs 121,800 per 10 grams in the national capital and slipped below $4,000 an ounce in the global markets on Tuesday as easing US-China trade tensions dampened safe-haven appeal.
According to the All India Sarafa Association, the precious metal had closed at Rs 125,900 per 10 grams on Monday.
In the local bullion market, gold of 99.5 per cent purity also tumbled by Rs 4,100 to Rs 121,200 per 10 grams (inclusive of all taxes) from its previous close of Rs 125,300 per 10 grams.
"Gold dipped further on Tuesday and extended losses due to diminishing safe haven demand.
"Selling accelerated and the yellow metal prices slid to a three-week low.
"This decline is attributed to technical selling that occurred after an intra-day failure to maintain levels above the $4,000 psychological threshold," Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities, said.
Silver prices also registered a steep fall of Rs 6,250 to Rs 1,45,000 per kilogram (inclusive of all taxes) on Tuesday.
The white metal had ended at Rs 1,51,250 per kg on Monday, as per the association.
In the international markets, spot gold remained under pressure, declining by $94.36, or 2.37 per cent, to $3,887.03 per ounce.
In the previous session, it had slumped to close below the $4,000-mark, down by $132.02, or 3.21 per cent.
"Spot gold continues to trade under pressure on reduced safe haven demand due to US-China trade deal optimism," Praveen Singh, Head of Commodities and Currencies at Mirae Asset Sharekhan, said.
Meanwhile, US President Donald Trump and his Chinese counterpart Xi Jinping are set to finalise the trade deal framework, with likely follow-up meetings. Trump also expressed confidence on a trade agreement with Japan also weighed on the bullion prices.
Praveen Singh said outflows from global gold-backed exchange traded funds (ETFs) fell for the third straight day on October 24, further weighed on the prices.
"Investors are awaiting the US Federal Open Market Committee's policy outcome on Wednesday where the central bank is widely expected to cut interest rates by 25 basis points," he added.
Spot silver also witnessed steep losses, falling 2.85 per cent to hit an intra-day low of $45.56 per ounce.
Saumil Gandhi of HDFC Securities said, "We believe that the correction in gold will persist, with a potential downside of 5-10 per cent, likely as big players take profit after the price increased by more than 50 per cent this year."
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