In global markets, gold fell for a sixth session in its longest losing streak since March 2009.
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Gold prices have fallen nearly 15 per cent (in rupee terms) over the last three months after a crack in global prices.
Nitin Nachnani, research analyst at Geojit Comtrade said investors should stay away from the yellow metal as international prices have breached the crucial support of $1400 an ounce. Gold prices may correct to $1330 an ounce, he added.
In rupee terms, gold has support at Rs 26,100, but that support is unlikely to be held, and the precious metal may breach below the Rs 25,700 mark, Mr Nachnani said.
Silver prices have also broke the important support of $2320, indicating that a correction to $2200 is now possible in silver on the COMEX, Mr Nachnani said. In rupee terms, silvers prices may fall to Rs 42,100 per kg, he added.
Gold premiums jump after import curbs:
Premiums for physical gold in India, the world's biggest gold buyer, have jumped sharply this week due to limited supply after the Reserve Bank of India (RBI) restricted imports to rein in a record current account deficit.
On May 13, the central bank banned gold shipments by banks on a consignment basis except to meet genuine demand from jewellery exporters. That followed moves by the Finance Ministry in January to increase the import duty by 50 per cent to 6 per cent of value.
Gold ranks second only to crude oil in India's spending on imports. In April, gold and silver imports more than doubled from the year before, regardless of the higher duty, as customers took advantage of lower prices.
That increased pressure on the current account balance and limited the central bank's room for monetary easing.
The bank said the import restriction was designed to moderate domestic demand but that banks could supply jewellery exporters.
(With inputs from Reuters)