On the domestic front, gold of 99.9 and 99.5 per cent purity plunged by Rs 290 each to Rs 30,310 and Rs 30,110 per ten grams, respectively.
Silver, however, held steady at Rs 44,900 per kg in restricted buying activity from industrial units and coin makers.
Traders said lack of buying support from retailers and jewellers who preferred to keep their activity restricted, anticipating further fall in coming days, mainly kept gold prices unchanged.
Silver also recorded a sharp fall of Rs 1,000 to Rs 37,400 per kg.
Gold in London, which normally sets price trend on the domestic front, fell 0.6 per cent to $1,311.65 an ounce.
The bullish outlook for gold is seen as a trigger for silver to perform better going ahead.
On the domestic front, gold of 99.9 and 99.5 per cent purity recovered by Rs 270 each to Rs 31,370 and Rs 31,170 per ten grams, respectively, after losing Rs 625 on Monday.
Globally, gold prices slipped by 0.26 per cent to $1,246.20 an ounce in early trade in London.
Marketmen said increased buying by jewellers and retailers to meet the festive season demand amidst a firming global trend mainly kept precious metals higher.
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Both gold and silver traded lower in Mumbai on fresh selling by stockists. Gold of 99.9 and 99.5 per cent purity fell by Rs 80 each to Rs 30,030 and Rs 29,880 per ten grams, respectively, while silver lost Rs 400 to Rs 45,250 per kg.
However, silver extended its weakness for the second straight day and lost Rs 90 to Rs 45,230 per kg on reduced offtake by industrial units and coin makers.
Traders said sustained buying by stockists helped gold prices to extend gains for the third straight session.
Stocks continue to outshine gold and silver when it comes to adding to investors' wealth by giving 8 per cent return so far this year.
In Mumbai, gold traded higher at Rs 30,330 per 10 grams and silver traded lower at Rs 44,400 per kg.
Silver also dropped Rs 560 to Rs 36,440 per kg.
Silver also spurted by Rs 1,800 to Rs 44,900 per kg on increased offtake by industrial units and coin makers.
Gold has held up better than many expected.
Bullion merchants said sentiments in gold remained extremely weak after it plunged to two-month low in overseas markets as the outlook for higher US interest rates reduced the appeal of the metal as an alternative investment.
Silver also lacked necessary follow-up support from industrial units and coin makers and lost Rs 300 to end at Rs 43,000 per kg.
Indian stock markets have outshined gold and silver in FY15.
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Silver also recorded a significant rise of Rs 950 to Rs 38,750 per kg.
The gold prices on Tuesday dipped as low as Rs 11,000 per 10 gram, down nearly one-fifth from this year's high of Rs 13,650 scaled nearly a month-ago on July 15. The price has come close to its level seen during the Diwali season last year, when it stood at near Rs 10,500 per 10 gram. This year, Diwali falls on October 28.
A depreciating dollar and the uncertainty in the equity markets globally are adding to the sheen of the yellow metal. With gold prices surging 20 per cent in the last two months, Gold ETFs are back in focus.
Custom authorities have been keeping strict vigil on the cargo movements from Bhutan, Taiwan, China, Afghanistan, South Korea Japan, and Dubai since January.
Gold prices rebounded by Rs 190 to Rs 31,000 per ten grams in the national capital today on pick up in festive season demand.
In 2012, Q4, the country's demand for the yellow metal during stood at 260.3 tonnes and for the entire year it was 863 tonnes.
The sentiment in gold remained bearish as the metal traded near its lowest level since September, 2010 in global markets.
Gold in London, which normally sets price trend in the domestic markets, rose by 0.1 per cent to $1,313.42 an ounce on speculation the US Federal Reserve may further cut monetary stimulus, raised demand for the metal as a safe haven.
The price is at a 4-year low, stabilising around Rs 25,000/10gm.
Traders said profit-selling by stockists at existing higher levels amid a weak global trend as congressional negotiators reached a US budget agreement, curbing the appeal of the metal as a safe haven, mainly influenced gold prices.
Traders said increased buying by stockists and retailers mainly kept gold prices remain higher for the third day.
While the ratio determines the extent to which the government is able to finance its expenditure, it is also an indicator of tax compliance. Developed countries have a higher contribution of tax to their GDP.
Silver also turned weak and dropped by Rs 350 to Rs 41,200 per kg on reduced offtake by industrial units and coin makers.
Traders said gold prices surged on hectic buying by stockists for the marriage season and weak rupee against the dollar, making the precious metal costlier.
Gold in Singapore, which normally sets price trend on the domestic front, dropped by 0.4 per cent to $1,283.28 an ounce after data showed that US employers added more jobs than expected which reduced demand for the metal as an alternate investment.
Surging capital markets in India are turning investors away from the bullion market to attractive stocks. This has resulted in the fall of gold prices on lack of buying supporters.
Traders said heavy selling by stockists against fall in demand at prevailing higher levels mainly kept pressure on gold prices.
The white metal had gained Rs 200 in the previous session.
With gold prices tumbling, retailers are witnessing a surge in demand and expect up to 50 per cent spike in sales volume during this marriage season.
In 2013-14, the funds witnessed outflow of Rs 2,293 crore
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