It fell over Rs 800 per 10 grams on Thursday and dipped further on Friday by Rs 700.
Gold on MCX for February delivery opened at Rs 27,550 per 10 grams, touched an intraday low of Rs 27,047 and was seen trading at Rs 27,340 – Rs 27,354 per 10 grams around 12:00 pm IST.
Domestic gold prices also registered a sharp fall mirroring futures trade. Gold of 99.9 percent purity fell to Rs 28,130 per 10 grams and gold of 99.5 percent purity plunged to Rs 25,540 per 10 grams.
The prices were seen lowest in Mumbai with 99.9 percent purity gold stood at Rs 27,680 per 10 grams and 99.5 percent purity at Rs 25,550 per 10 grams.
The fall in prices is attracting physical buyers of India, who waited long for the prices to come down.
Overseas gold also dipped widely below $1,600 level. US spot gold was seen trading at $1,588 - $1,589 per ounce.
This is the biggest fall in three months. Last it fell to this level in September.
The fall in prices is due to lingering euro zone worries and a weak global trend.