Spot gold in the international markets was trading around $1260 an ounce, as equities drifted lower following weak data from China and overnight fall in the US markets.
The year 2014 has begun on a good note for international prices of gold, after the metal lost almost one third of its value in 2013.
On the MCX, Gold for February delivery was trading Rs 301 lower at Rs 29,308. In India, gold prices have not gained from a drop in international prices, as the rupee has fallen against the dollar.
Gold is likely to now take cues from the Fed Open Market Committee meet, which will decide on further QE3 easing, if any. Should the Fed decide to further taper its QE3 easing programme, it's likely that gold prices may fall.