Mumbai Gold and silver futures on the Multi Commodity Exchange (MCX) though opened the session marginally up, they soon slipped into the red territory tracking negative movement in international bullion markets on the rebounding of the US dollar. Both the precious metals were trading lower during early hours Tuesday. While October gold dropped Rs 29/10gm; December silver traded down Rs 184/kg.

Spot gold last traded at USD799/oz, down USD2.50 since New York close on EUR/USD weakness, the pair is now at overnight low of 1.4053. ScotiaMocatta tips gold to head lower from recent range of USD791-USD819. "Our view is this sideways price action is a pause in our bear trend. The risk for gold is a break lower to the August low of USD773.50."

Gold's overnight support from a lower US dollar after the Fannie and Freddie news disappeared mid-session Monday as the greenback was by then posting strong gains and oil prices had reversed into negative territory. December gold fell 30 cents to USD802.50 an ounce on the Comex division of the New York Mercantile Exchange. "When oil started to have problems and the dollar got better, gold lost support," says Sterling Smith, vice president with FuturesOne. Comex December silver fell 26 cents to settle at USD12.065 an ounce.

MCX October gold contract opened up Rs three at Rs 11,652/10gm. The contract fluctuated between Rs 11,617 and Rs 11,670/10gm. At 11.10 am IST, the contract traded down Rs 29 at Rs 11,620/10gm.

MCX December silver opened up Rs 86 at Rs 19,240/kg. The contract tossed between Rs 18,965 and Rs 19,290/kg. At 11.11 am IST, the silver contract traded down Rs 184 at Rs 18,970/kg.

(With inputs from Dow Jones Newswire)