Things seem to be getting worse for precious metal gold and its prices are likely to fall more rapidly than expected in the coming months.

The prices of the yellow metal have plunged to five-year lows recently, as worries over imminent interest rate hike by the US central bank triggered the sell-off.

At its July meeting, the US Federal Reserve has indicated that it is moving closer to raising rates for the first time after keeping them at record low since the financial crisis of 2008.

"The July statement highlighted the progress the US economy has made towards meeting the Federal Open Market Committee (FOMC's) conditions to start normalising rates," said Credit Agricole Corporate and Investment Bank in a note.

Due to rising expectations on Fed rate hike, a firmer US dollar has been weighing heavily on the gold prices for the past two weeks and the metal prices are heading towards their worst monthly decline in two years.

In the international markets, gold prices plummeted by $100 to $1,100 per ounce in the past one month, as concerns intensified over the Fed rate hike in September, which is seen as a major negative for the metal prices.

In the Indian markets, the prices slipped to below Rs 24,600 per 10 grams, marking their lowest level since 2010. The prices have fallen by over 27% in the past nine months, declining from a high of Rs 34,000 per 10 grams.

The prices are estimated to see a drastic fall to Rs. 20,500 per 10 grams once the US Fed begins raising later this year, according to India Ratings and Research.

"Gold is out of fashion like flared trousers: no one wants it," Robin Bhar, an analyst at Societe Generale SA in London, told Bloomberg.

A Bloomberg News survey showed that the gold prices could fall to $984 an ounce before January next year.

Besides concerns over a rate rise in the US, gold prices are expected to remain under pressure due to its losing appeal as safe-haven and slowing demand for the metal in the world's second largest consumer China.

Recent crisis in Greece and a crash in Chinese stock market failed to give a lift to the gold prices.

Earlier in July, China reported that its gold reserves rose to 1,658 tonnes by the end of June, up 57% since April 2009, which is far below the market expectations.