In the financial capital, Mumbai, prices of the metal dropped to Rs 28,105, a fall of Rs 75 per 10 gms.
Bullion traders said selling pressure gathered momentum after gold prices overseas dropped to the lowest level in 2012 as dollar's investment appeal increased on widening euro zone debt crisis.
Generally, gold and dollar move in opposite directions. This means a stronger US dollar tends to keep the price of gold lower.
The euro tumbled against dollar at 1.2771 -- the lowest point since January 18-- in London.
Meanwhile, the rupee breached the psychologically crucial 54-level against the US currency but recouped losses to end higher at 53.79 after RBI intervened in the forex market to prop up the local unit. Rupee depreciation also weighed against gold as a weaker local currency increases the landed cost of the dollar-quoted gold in India.
Fall in gold prices follows 10-day winning streak up to April 30 that prompted many to forecast that the metal breaching Rs 30,000 level anytime.
