On MCX, gold futures were trading 0.70 percent or Rs 264 lower at Rs 37,585 per 10 grams of 22 carats. Silver futures hit an intraday low of Rs 45,900 per kilo on Thursday. The prices of these metals have sharply fallen when compared to their all-time high attained earlier this month.
Gold has declined by Rs 2,300 from its high of Rs 39,885 while silver prices have dipped by Rs 5,590 from Rs 51,489 per-kilo-rate seen in the first week of September.
At the start of the week, prices of these safe-haven assets rose due to the uncertainty that loomed over how long Saudi Arabia would take to restore back to its full capacity after the drone attacks on its oil fields knocked out 5.7 million barrels of daily crude production or 50 percent of the kingdom's oil output. Gold and silver prices relapsed on Tuesday after Saudi Arabia said that it will restore to full production by the end of September.
On Wednesday, the US Federal Reserve's lack of clarity on the future monetary policy caused a marginal decline in gold prices in the international market.
The Fed decided to lower its interest rates for a second time this year in a 7-3 vote but signalled that further cuts are unlikely as its labour market remains strong. While the cut was widely expected by the markets, it was the split vote that raised some concerns over forecasting the path of monetary policy ahead.
Spot gold fell 0.6 percent to $1,494.05 per ounce.
Apart from the decline in international rates, rupee's weakness also weighed on rates of these precious metals in India. The Indian rupee opened 11 paise lower at 71.23 on Thursday after the US dollar gained from the Fed's rate cut decision.
The precious metal prices have been volatile since mid-August as an effect of geo-political tensions and foreign exchange rates. Towards the end of August, the rates spiked over an escalation of US-China trade war after American president Donald Trump announced additional tariffs on Chinese goods.
The concerns have temporarily eased after Trump showed goodwill gesture towards China by postponing the date of implementation of the new set of tariffs from 1 October to 15 October. The two countries are also scheduled to formally meet for trade negotiations in the next month.
Further, the prices may have also lowered on account of profit booking.