Gold futures prices fell by 0.54% to Rs 28,716 per 10 grams on Wednesday, tracking a weak trend overseas as a stronger dollar reduced the appeal of the precious metal as an investment option.
In addition, subdued demand in the domestic spot market at prevailing levels put pressure on gold prices in futures trade.
At the Multi Commodity Exchange, gold for delivery in February fell by Rs 155, or 0.54%, to Rs 28,716 per 10 grams, with an open interest for 3,175 lots.
In a similar fashion, the metal for delivery in far-month April shed Rs 156, or 0.53%, to Rs 29,019 per 10 grams, with a trading volume of 85 lots.
Market analysts said offloading of positions by speculators influenced by weak cues from overseas markets --with the dollar continuing its rally against the euro amid the persisting debt crisis in the euro zone -- eroded demand for the precious metal as an alternative investment avenue.
However, weakness in the rupee, which slumped to a fresh record low of Rs 53.75 per dollar in early trade today, capped the losses.
Meanwhile, gold fell by 2.07% to an almost seven-week low of USD 1,630.90 an ounce in Singapore.