Gold continues to flounder on demand slump

Gold prices tumbled to its lowest level in more than three months at the domestic bullion market here today on bouts of heavy speculative unwinding against the backdrop of fading demand.

Reduced offtake by retailers and jewellery stockists in view of the ongoing 'Pitru Paksha' considered by Hindus to be inauspicious period amid global volatility also contributed to the downtrend, a bullion trader said.

The industrial metal, silver, also plummeted sharply to close below the key Rs 42,000 per kilo mark following frantic sell-off by traders.

Standard gold (99.5 purity) slumped by Rs 195 to finish at Rs 27,045 per 10 grams from overnight level of Rs 27,240.

Pure gold (99.9 purity) also dropped by similar margin to end at Rs 27,195 per 10 grams against Rs 27,390.

Silver (.999 fineness) tanked by a hefty Rs 680 to conclude at Rs 41,900 per kg against Wednesday's closing level of Rs 42,580.

Globally, the shiny metal remained under intense selling on strong dollar amid increasing speculation that the U.S. Federal Reserve could soon raise key interest rates.

Spot gold was bid lower at USD 1,248.59 an ounce in early European trade.