Dollar gained its strength against major currencies, which made investors to shift focus from gold to dollar. Historically, gold and dollar share an inverse relationship with each other and the sudden spike in dollar weighed on gold.
Recovery seen in US labor market and uncertainty over the US stimulus weighed further on the sentiment.
Sentiment weakened further amid uncertainty over US stimulus after signs of progress in the labor market, dimming the appeal of the bullion, a hedge against the inflationary risk of monetary stimulus.
Tracking global trend, gold futures were seen trading lower by Rs 159 at Rs 26,840 per 10 grams on the Multi Commodity Exchange at 12.10 pm IST. Click to see gold prices across major cities.
Silver futures for latest delivery was seen trading at Rs 45,085 per kg lower by Rs 199.
Traders are expecting to see a rise in physical demand today on the account of gold buying festival Akshaya Tritiya, as it is considered auspicious to buy gold on that day.
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