Gold drops on weak demand, global cues; silver extends gains

Gold prices dropped after a three day rally at the domestic bullion market in Mumbai due to reduced buying by stockists and retailers amidst sluggish overseas sentiment. In contrast, silver firmed up further owing to higher industrial offtake. Standard gold (99.5 purity) shed by Rs 90 to conclude at Rs 27,090 per 10 grams from overnight closing level of Rs 27,180.

Pure gold (99.9 purity) also went down by a similar margin to settle at Rs 27,240 per 10 grams from Rs 27,330 previously. Silver (.999 fineness), however moved up by Rs 25 to end at Rs 37,770 per kg compared to Rs 37,745 on Tuesday.

In worlwide trade, the yellow-metal pulled back modestly, taking a breather after rallying to three-weeks high amid investors caution ahead of the US Federal Reserve's December meeting minutes release later in the day.

Meanwhile, safe-haven demand in the midst of global economic worries amid uncertainty over Greece's future in the eurozone and sliding equities, capped the fall. Spot gold was substantially higher at US $1,209.00 an ounce in early European trading after hitting a daily peak of US $1,211.80.