Gold prices plunged to an eight-month low of Rs. 29,335 per 10 gm by falling Rs. 340 on Wednesday as the yellow metal's safe-haven appeal waned with investors shifting their money into risky assets on renewed optimism over the US economy.
"Demand for riskier assets has increased in recent times due to bullish trend in equities in the US," said Naveen Mathur, gold analyst, Angel Broking.
"When demand for riskier assets increase, investors pull out money from gold."
India's passion for gold, seen by many as a hedge against high inflation, has led to a rise in its current account deficit, which reached an all-time high of 6.7% of gross domestic product in the December quarter.