Gold prices plunged to over three-month lows and ended below the Rs 26,000-mark on Friday tracking the fall in metal prices overseas amid growing fears of an impending interest rate hike by the US central bank in December.

The yellow metal prices fell Rs 300 to close at Rs 25,950 per 10 gram at the bullion market, while silver prices slumped by Rs 500 to close at Rs 34,400 per kg.

In the overseas markets, the precious metal prices traded just above $1,080 per ounce, touching the lowest levels not seen since 2010.

"In technical terms all precious metals look badly affected, so further selling should be expected which will presumably exacerbate or prolong the price slide," said Commerzbank Corporates & Markets in a note.

Sentiments in the precious metal markets was dampened after a slew of economic data in the US showed that the country's labour market remains robust enough for the US Federal Reserve to raise policy rate as early as next month.

Last week, in her Congressional testimony, US Federal Reserve chairperson Janet Yellen had hinted at monetary tightening next month.

Amid growing indications of a rate hike in December, the US dollar has appreciated to multi-month highs, weighing on safe-haven assets like gold.

"The Fed has been a key driver of precious metals over the recent weeks and this will likely continue in the weeks and months ahead," the Bullion Desk quoted Georgette Boele, co-ordinator FX and precious metals strategy at ABN AMRO.

"Our above-consensus Fed call should push gold prices towards $1,000 per ounce this year and $900 per ounce in 2016 mainly because of investor position liquidation," she added.