Hopes were dampened after the Federal Reserve gave no hint quantitative easing, or "QE3", which would have added to liquidity and helped boost inflation.
Gold which is considered a hedge against inflation would also climb and would have offered superior returns. On Wednesday, banks received 530 billion euros of cheap money from the European Central bank, injecting trillions of dollars into the system.
On the Multi Commodity Exchange (MCX), gold for April delivery was trading at Rs 27,945 per 10 grams after scaling an intraday high of Rs 27,999 per 10 grams.
While, silver for march delivery was at Rs 57,944 per kgs and touched an intraday high of Rs 58,226.
Domestic gold of 99.9 and 99.5% plunged by Rs 920 to Rs 28,140 and Rs 28,800 per 10 grams, respectively.
Fall in gold prices can cheer many of the gold buyers because marriage season is still on, but can upset gold futures investors who are long on the commodity.