The precious metal had gained Rs 335 in the last two days.
Following the Reserve Bank easing he 20:80 gold import norms, India Bullion & Jewellers Association (IBJA) said gold prices are likely to fall to Rs 23,000-24,000 per 10 grams by Diwali.
Gold price recovered a bit on favourable cues from global markets.
Silver also dropped by Rs 300 to Rs 38,400 per kg.
Gold prices declined by Rs 100 to Rs 28,200 per 10 grams at the bullion market on Friday
Gold prices drifted by Rs 100 to Rs 28,400 per ten grams at the bullion market today as demand from jewellers and retailers eased at existing levels amidst a weak global trend.
Silver followed suit and recovered Rs 400 to Rs 34,100 per kg.
Gold prices surged by Rs 150 to trade at fresh three-month high of Rs 27,575.
The Madras high court has directed the Tamil Nadu Crime Branch-CID police to probe the case of 'missing' gold, which left the country's premier investigating agency red-faced.
The poor deployment of WLATMs has tripped what the central bank sought to achieve back in 2012.
Silver also extended its rally for the eighth day.
Gold slipped to near 5-1/2-year lows on Friday and was on course for a sixth straight weekly fall.
Spot gold was up 0.6 percent at $1,103.60 an ounce by 0318 GMT, after an early low of $1,096.65.
Gold prices may trade higher in the coming days because of weaker dollar and speculations of US Fed rate cut.
The decline is mainly due to the record high prices that dampened consumer demand, Bombay Bullion Association director Suresh Hundia said, adding volume of shipment also declined in October as the festival demand is no longer there.
Dealers anticipated a sharp rise in jewellery demand this wedding season, but then came demonetisation.
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Silver declined by Rs 200 to Rs 38,550 per kg.
Globally, gold declined from the highest level.
Silver also recorded a steep fall of Rs 1,550 to Rs 34,450 per kg.
Silver also remained under selling pressure.
The demand for the precious metal declined as the prices hovered between Rs 14,500 to Rs 15,000 per 10 grams level in the domestic markets, Bombay Bullion Association president Suresh Hundia told PTI from Mumbai. Multi Commodity Exchange October gold was ruling at Rs 14,865 per 10 grams on Monday, while in global markets it was at $935.8 an ounce (28.34 grams).
A strengthening rupee following a sharp surge in the inflow of foreign money from investors and "illegal imports" were among some of the reasons for the fall.
Silver also rebounded by Rs 450 to Rs 38,100 per kg
Gold surged by Rs 325 to trade at over three-month high of Rs 27,890 per 10 grams at the bullion market on Thursday.
Gold import stood at 18 tonnes in May, according to the data provided by the Bombay Bullion Association. Gold prices ruled over Rs 14,600 per 10 grams level in both spot and futures markets last week. In the international markets gold prices were at 938.55 an ounce (28.34 grams).
Gold slips by Rs 150 on low demand.
Concern would kick in if imports stay at or over 100 tonnes a month.
Gold regained its sheen on Wednesday by soaring Rs 315 to Rs 27,565 per 10 grams at the bullion market.
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Bullion merchants said apart from sustained buying by jewellers and retailers to meet rising wedding season demand, a firming global trend mainly boosted the sentiment.
Gold in New York, which mostly set the price trend on the domestic front, jumped up by $33.50, or 2.73 per cent to $1,262.60 an ounce and silver by 0.68 per cent to $16.96 an ounce in Thursday's trade.
Gold continued its upward trend for the sixth straight day and gained another Rs 190 to Rs 26,190 per ten gram at the bullion market on Thursday.
Bullion merchants said persistent rise in gold prices is mostly due to a firming trend in global markets as concerns over European economy mounted, spurring demand for safe-haven, and increased buying by jewellers to meet wedding season demand at domestic spot markets.
Silver also spurted by Rs 1,000 to Rs 37,500 per kg.
Silver also recovered by Rs 515 to Rs 36,750 per kg on increased offtake by industrial units and coin makers.
The all-time high price of silver is Rs 75,000 a kg, recorded in April 2011.
The precious metal has lost Rs 100 in the past two days.
Gold prices will rise next year as the financial crisis pushes more investors into the precious metal safe haven, according to delegates polled on Tuesday during the London Bullion Market Association annual meeting in Kyoto.
Orders for the festive season abroad begin from next month.
Silver also reclaimed the Rs 34,000 per kg mark.
Diversion of funds towards the surging equity weighed on the precious metal's price
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