Gold futures for May delivery slipped below the Rs 26,000 mark on the MCX on Friday as the yellow metal declined for the seventh straight session in the global markets. The May contract traded Rs 158 (0.60 per cent) lower at Rs 25,973 as of 12.30 p.m.
Indian gold futures fell 1.5 per cent on Thursday to their lowest level in nearly a month. There's more weakness in store, analysts say.
Shriram Pitre of Anand Rathi told NDTV that investors should sell gold on rallies for targets of Rs 25,900- Rs 26,000. On Thursday, Nitin Nachnani of Geojit Comtrade told NDTV that gold prices may breach the Rs. 25,700 mark.
Prices in the precious metal have been falling despite physical demand for gold in India and China. The metal is down 17 per cent for the year and is on track for its worst weekly decline in a month.
"The demand from China and India cannot take gold prices up because the selloff in ETFs is too high," Mr Pitre said.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said holdings fell 0.55 percent to 1041.42 tonnes on Thursday, the lowest in four years.
Physical demand was also quiet on Friday as consumers in the biggest gold buyers, India and China, waited for prices to stabilize or drop further, traders and dealers said. Demand in India is being hurt by central bank curbs on gold imports. Limits on bank consignments have hit supply and triggered a sharp jump in premiums.
Gold prices have come under renewed weakness tracking the strength in the U.S. dollar, which held firm near a 10-month of 84.094 high versus a basket of currencies on Friday.
"The euro may go down to 1.27, which will put further pressure on gold prices," MR Pitre said.
In global markets, spot gold was down 0.53 per cent at $1,378.41 an ounce by 09.15 a.m., having fallen to a four-week low of $1,369.29 on Thursday as renewed liquidation in gold ETFs and a recent drop below the $1,400-per-ounce level spooked investors.
(With inputs from Reuters)