Bullion traders in the national capital said the heavy sell-off by stockists was triggered by global trends in the prices of the precious metal. Earlier this year, the precious metal had lost Rs 920 on March 1.
Similarly, gold futures traded 0.18 per cent lower at Rs 29,065 per 10 gm largely in tandem with a weakening trend overseas. At the Multi Commodity Exchange, gold for delivery in June traded lower by Rs 52 to Rs 29,117 per 10 gm.
Apart from these factors, sluggish demand among domestic retailers and investors at prevailing higher levels of around Rs 30,000 further dampened the sentiment, dealers said.
Yesterday, ratings major Fitch cut its rating on Spain's debt by three notches to BBB and placed the country on a negative outlook.
Selling pressure today gathered momentum after gold declined and headed for its worst performance in four weeks in global markets as US Fed Chairman Ben S Bernanke dampened expectations for monetary stimulus.
The last stimulus by US weakened the dollar and boosted stocks and commodities.
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In London, gold fell by 1.3 per cent to USD 1,569.52 an ounce. In contrast, the dollar gained against major rivals.
The euro fell 1 per cent against the dollar. The euro was last 0.9 per cent lower at USD 1.24.
Gold of 99.9 and 99.5 per cent purity tumbled by Rs 700 each to Rs 29,500 and Rs 29,300 per 10 grams, respectively. The metal had lost Rs 200 yesterday. Sovereigns followed suit and lost Rs 300 to Rs 23,900 per piece of eight grams.
In line with gold's weak trend, silver also dropped by Rs 1,745 to Rs 53,755 per kg on poor offtake by industrial units.