Precious metals lost the ground gained in the previous sessions following a 2 percent slide in oil prices and 1 percent loss in U.S. equity indexes, as investors grabbed profits when a weak U.S. confidence reading suggested consumer demand would languish for some time to come.

Gold and Silver futures lost 1.49 and 1.59 percent respectively on COMEX. The loss was less severe on MCX as the prices got support from the weak rupee.

IN FOCUS:

In supply news, the South African mineworkers' union told that it had accepted the latest wage offers from gold and coal companies, averting a strike in the mining sector. South Africa is the world's third biggest gold producer.

The union accepted a wage offer of between 9 and 10.5 percent in the gold sector -- where South Africa is the third biggest global producer -- after initially demanding a hike of 15 percent. Annual inflation stands at 8 percent.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings fell 3.36 tonnes, or 0.3 percent, to 1,083.25 tonnes as of July 28 from the previous business day. The holdings had been steady at 1,086.61 tonnes since July 22.

Gold and gold receivables held by euro zone central banks stayed unchanged at 232.126 billion euros in the week ending July 24, the European Central Bank said on Tuesday.

The dollar gained against the basket of currencies as the investors took flight to quality. Dollar index rose by 0.36 percent, settling at 78.909.

FUNDAMENTAL OUTLOOK:

Precious metals are likely to trade sideways to down during the day. Sell off in crude oil and weaker demand resulted in sharp fall yesterday. We recommend selling precious metals on rallies.