Gold fell to a two-week low on Wednesday as rising risk aversion boosted the dollar on the second day of gloomy U. S. economic news which prompted sell off in precious metals.

Silver future lost more severely than gold. It declined by 2.31 and 3.46 percent on MCX and COMEX respectively.

The IMF has provisionally agreed to sell the gold to raise resources for increased lending to poor countries. A final decision by all 186 IMF member countries on the sales is expected at IMF meetings in Istanbul in October and requires the support of 85 percent of the membership.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings fell 10.38 tonnes, or about 1 percent, to 1,072.87 tonnes as of July 29 from the previous business day. It is the second day in a row that holdings fell.

The U. S. Commerce Department reported June durable goods orders fell 2.5 percent, the largest drop since January, after rising by a revised 1.3 percent in May, previously reported as a 1.8 percent surge.

Almost 15 million ounces or some 450 tonnes flowed into the six gold-backed ETFs monitored by Reuters in the first quarter, worth more than $13 billion at the time. But as the financial markets started to stabilize, appetite for the funds slackened.

The U. S. dollar climbed to a two-week high against the euro as steep losses in Shanghai's stock market and the durable goods report reignited the greenback's appeal as a safe-haven currency.

Precious metals: After yesterday’s sharp fall, some bargain hunting cannot be ruled out but overall trend still remains weak. We recommend selling precious metals on rise.