Gold prices on Tuesday plunged Rs 600 to Rs 34,870 per 10 gram in the bullion market here, tracking weak global trends amid a strong dollar and easing demand from local jewellers.
Globally, spot gold was trading lower at USD 1,394.39 an ounce, while silver was down at USD 15.08 per ounce in New York.
"Spot gold ticked lower, held below USD 1,400 an ounce, due to a strong dollar which rallied to a three-week high. Reduced expectations of an imminent US interest rate cut supported the dollar," Hareesh V, Head Commodity Research, Geojit Financial Services said.
"Weak demand expectation from the world's second top consumer, India, due to a hike in duty also weighed down the sentiments. However, feeble global equities restricted major downside in the counter," he said.
Last week, in the Union Budget for 2019-20, the government proposed to increase customs duty on gold and other precious metals to 12.5 per cent from the current 10 per cent.
Expectations that the US Federal Reserve will soon cut interest rates was one of the reasons behind gold's recent spike to a six-year high. However, strong gains in US employment data have cast doubt on Fed's rate cut expectation, Hareesh said.
According to the All India Sarafa Association, gold of 99.9 per cent and 99.5 per cent purity plummeted Rs 600 each to Rs 34,870 per 10 gram and Rs 34,700 per 10 gram, respectively, in the national capital.
Sovereign gold, however, held steady at Rs 27,300 per eight gram.
Meanwhile, silver ready declined by Rs 48 to Rs 38,900 per kg and weekly-based delivery slumped Rs 93 to Rs 38,000 per kg due to reduced offtake by industrial units.
Prices of silver coins held flat at Rs 81,000 for buying and Rs 82,000 for selling of 100 pieces.