In global markets, gold prices today fell 0.2% to $1,493.65 an ounce. They are now down sharply from recent highs of $1,550 as an improvement in risk appetite took some shine away from safe-haven assets like gold.

"Silver along with gold has corrected from recent highs amid reduced safe-haven buying," Kotak Securities said in a note. Profit-taking after recent sharply rally and outflows from ETFs have hurt silver prices, the brokerage added, saying: "Silver has lost its upward momentum amid correction in gold and lack of fresh ETF impetus."

Global risk sentiment has improved on hopes for a thaw in US-China trade frictions and expectations that the European Central Bank would kick off another wave of monetary easing by global central banks. Equity markets have rallied over the past few days across the globe.

"Gold has corrected sharply in last few days amid stability in equity market and sharp rise in US bond yields. Risk sentiment has improved amid prospect of US-China trade talks in early October and monetary easing measures by some central banks," Kotak Securities said.

US President Donald Trump on Wednesday agreed to delay an additional increase in tariffs on Chinese goods by two weeks. Trump's delay of additional tariffs on Chinese goods comes a day after China said it would exempt 16 types of US products from import tariffs. US and China are set to resume working-level talks later this month and high-level.

Back in India, the dip in gold prices has led to hopes that jewellery demand may improve ahead of the festive season. Investment demand for gold has remained strong with gold-backed ETFs in India seeing highest net inflows in six years in August.

Sovereign gold bonds, which are issued by government of India and have a tenor of eight years, are currently open for subscription. Apart from from giving 2.5% interest, sovereign gold bonds don't attract capital gains tax if held till maturity.