Gold prices further slid on Monday even as investors continued to resort to selling aggressively. During the day, gold fell to a low of Rs. 26,250 per 10 grams, and was trading at the Rs. 26,400-level late evening at the Multi-Commodity Exchange (MCX). This is a fall of 5.5 per cent or Rs. 1,525 per 10 grams from the previous close, and the sharpest single-day fall.

In international markets, gold fell by $90.7 per ounce in London to hit a low of $1,384.3 per ounce. Gold prices have been on the downslide for over a week.

“Commodity Exchange (Comex) gold has breached the crucial support level of $1520 per ounce suggesting that the downtrend in gold continues,” said Nitin Nachnani, analyst at Geojit Comtrade, a commodity trading outfit. Given the pace of the fall in prices, Mr. Nachnani said, the next support levels of $1,360 and $ 1,280 per ounce could come about very soon.

“The confidence in gold has been severely dented given the magnitude and the forcefulness of the recent fall,” said Kishore Narne, Head of Commodities, Motilal Oswal Securities, while adding “Fears of a Cyprus gold sale, liquidations in exchange-traded funds (ETFs) and unwinding of long positions by institutions in the international markets have contributed to the downfall.”

The prospects of any meaningful recovery in gold remain weak, and, given the lack of any major triggers in the near term, gold prices are unlikely to reverse the downtrend anytime soon.

Short-term pullbacks are entirely possible given the speed at which prices have declined towards the 27,300-level but would only consolidate before a further fall, said Mr. Narne. “We anticipate another 12-15 per cent fall from here, on the domestic markets, before the end of 2013-14.”

“On the MCX front, we expect prices to correct up to levels of Rs. 25,800 and Rs. 25,000 per 10 grams. So even after a correction of almost 20 per cent from the life-time high of Rs. 32,464 per 10 grams, our advice to investors will be to still wait before taking any long position,” Mr. Nachnani said.