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Gold futures declined by 0.7 per cent to Rs 28,292 per 10 grams in early trade today after the precious metal dipped below the $1,600 an ounce-level in overseas markets as a stronger dollar eroded its appeal as an alternative asset.
In addition, subdued demand for the precious metal at the domestic spot market dampened the trading sentiment.
At the Multi Commodity exchange, gold for delivery in April fell Rs 200 or 0.7 per cent to Rs 28,292 per 10 grams with an open interest for 100 lots. In a similar fashion, the metal for delivery in February lost Rs 196 or 0.70 per cent to Rs 27,987 per 10 grams with a trading volume of 1,918 lots.
Analysts said reports of a weakening trend in global markets on concerns that Europe’s debt crisis is escalating, spurred the demand for dollar, thereby eroding the appeal for gold as an investment option. This, in turn, dampened the trading sentiment at the futures market.
Meanwhile, gold dipped below the $1,600-mark, shedding 0.29 per cent to a seven-week low of $1,571.90 an ounce in Singapore in early trade today. Prices of the precious metal have tumbled by nearly 8 per cent in the past three sessions overseas.
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