Indian gold is likely to extend losses past its lowest level in a week, hit on Monday, weighed by a stronger dollar overseas, considered an alternative to the yellow metal.
The dollar and gold often move in opposite directions as the two compete for funds globally. The euro slipped against the dollar on Monday as traders awaited clarity on when Spain would request a bailout to shore up its battered finances.
"Gold is likely to correct a bit on strong dollar," said Harish Galipelli, vice president of JRG Wealth Management.
The most active gold for December delivery on the Multi Commodity Exchange (MCX) was 0.40 percent lower at Rs 31,159 per 10 grams, after hitting a low of Rs 31,118 per 10 grams, a level last seen on October 8.
Selling is advised in gold at Rs 31,250 per 10 grams, for a target of Rs 30,700 per 10 grams, with a stop loss of Rs 31,520 per 10 grams, said Galipelli.
A revival in gold demand, triggered by a sharp decline in prices, could keep the downside limited.
The festival and wedding season will start picking up in late October and peak next month during Diwali and Dhanteras, traditionally occasions for buying gold.
Silver futures are also likely to fall past their lowest levels in a month.
Silver for December delivery was 0.75 percent lower at Rs 60,742 per kilogram, after hitting a low of Rs 60,622 per kilogram, a level last seen on September 5.
Selling could be initiated in silver at Rs 61,500 per kilogram, for a target of Rs 58,500 per kilogram, said Galipelli.
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