Gold prices tumbled by Rs 800 to hit nine-month low of Rs 28,550 per ten grams in the national capital today after the Reserve Bank eased import norms.
Besides, sluggish demand and subdued global cues also weighed on the precious metal prices.
Silver in range-bound movements fell by Rs 50 to Rs 41,650 per kg.
Traders said sentiments turned weak on increased offerings by stockists, triggered by the Reserve Bank's decision to ease gold import norms by allowing select trading houses, in addition to already permitted banks, to procure the metal to boost exports.
There are expectations that the RBI's move would increase gold supplies and reduce prices in the domestic markets, they said.
The Reserve Bank of India (RBI) in July last year had imposed severe restrictions on gold imports in order to check burgeoning current account deficit and sliding rupee.
The central bank had tied imports with exports and prescribed a 20:80 formula. This facility was available to select banks only and other entities were barred from importing the metal.
Globally, gold in New York, which normally sets price trend on the domestic front, fell 0.19 per cent to USD 1,291.90 an ounce in yesterday's trade.
On the domestic front, gold of 99.9 and 99.5 per cent purity plunged by Rs 800 each to Rs 28,550 and Rs 28,350 per ten ten grams, levels last seen on August 8 last year.
Sovereign, too faced some pressure and lost Rs 100 at Rs 24,800 per piece of 8 gram.
On the other hand, silver ready ruled shed Rs 50 to close at Rs 41,650 per kg while weekly-based delivery lost Rs 210 at Rs 40,990 per kg. Silver coins continued to be asked around previous level of Rs 79,000 for buying and Rs 80,000 for selling of 100 pieces.