Gold futures, which hit their lowest level in a week, are likely to extend losses following weak equity markets, while silver is likely to extend losses by more than 2 percent following the yellow metal.


"Gold's co-relation with equities is very strong now. And with Europe getting deeper into crisis, gold's fall could be accelerated," said Gnanasekar Thiagarajan, director with Commtrendz Research.

The lack of confidence in Europe pushed investors into the relative safety of the U.S. dollar, rather than gold, which has fallen by about 5 percent in the last week alone.

The U.S. currency and the yellow metal move in opposite direction as the two compete for funds.

The most-traded February gold contract on the Multi Commodity Exchange contract was 0.67 percent lower at 28,911 rupees per 10 grams at 4:56 p.m . , after hitting the lowest level since December 6 of 28,836 rupees.

"Gold is not looking good and is headed to 28,200/28,300 rupee levels," said Thiagarajan, adding sell MCX gold on rallies to 28,850, with a stop loss of 29,000, for a target of 28,200 rupees.

The weak buying trend is likely to continue in India, the world's biggest consumer of bullion, and likely to weigh on prices.

The most-active silver for March delivery on the MCX was 1.02 percent lower at 56,353 rupees per kg.

Silver may trade in the range of 55,000-56,500 rupees, said Thiagarajan.