In fact, on Thursday the metal reacted sharply and dropped 1%, but, recovered from lows on Friday after the US jobs data report led investors to believe that the Federal Reserve would continue its asset buying programme.

Domestically, Indian gold tracks international gold, with rupee being another important variable. In fact, the rupee dropped sharply this week, which will lead to higher cost of the metal, despite a fall in international prices.

Physical gold and demand for ETFs is likely to remain steady and much of gold's movement would remain sensitive to easing conditions across the globe.

According to a Reuters report, among gold-backed exchange-traded funds, the No. 1 SPDR Gold Trust reported an outflow of 9.638 tons as of Jan. 3, the biggest one-day decline in its holdings since Sept. 26.

It's difficult to believe that gold would rally sharply, though the world is awash with liquidity and much of it could find way into gold investments.However, funds are increasingly betting on equities and shunning gold, which is why the metal has been dropping for the last couple of months.

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