Gold futures for May delivery declined for the seventh straight session in domestic markets. The May Futures contract on the MCX traded 1.6 per cent or Rs 408 lower at Rs 25,427 per 10 gram as of noon.
Gold prices have come under tremendous selling pressure on the back of global selloff in the yellow metal. Investors have been dumping gold, which is down 20 per cent so far this year, as stocks continue to outperform. If gold closes in the red on Monday (in the global markets gold is down for the eighth straight day), it would match the metal's longest losing streak since March 2009. (Track gold prices)
Gold is trading at the important support of Rs 25,400, a level it tested nearly two weeks back, technical analyst Chirag Kabani told NDTV Profit.
"It 25,400 is taken out on a weekly closing basis, gold may slide all the way to 24,600-23,500 in the medium term," Mr Kabani said.
"The trend will continue to be bearish. There is critical support around Rs 24,250-24,500 and we could see some consolidation," said Kishore Narne, director with Motilal Oswal Commodities Broker.
Silver prices plunge:
Silver, which has fallen 30 per cent in 2013, hit its lowest since September 2010 in early trade on Monday. Silver prices crashed nearly 8 per cent in morning Asian trade, Mr Kabani said, but there has been recovery in the past one to two hours. On the MCX, prices opened down at the lower circuit, around Rs 40,900 levels.
"Rs 41,000 is an important support in the domestic market. If there is sustained trade below that, silver prices may head down to Rs 38,500 to Rs 39,000 in the medium term," Mr Kabani said.
The gold-silver ratio is at its highest level since September 2010 with an ounce of gold currently buying 63 ounces of silver. That is twice as much as in April 2011, when silver was trading considerably higher.
What's driving gold and silver prices down:
1) Fears that the U.S. Federal Reserve may roll back its monetary easing programme have hurt gold's appeal as a hedge against inflation.
2) Hedge funds and other big speculators in commodities have started selling gold in a big way.
3) Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have fallen to the lowest in four years.
(With inputs from Reuters)