Gold prices fell sharply on Monday to drop below Rs 32,000 per 10 grams amid profit taking after the recent steep rise while silver too lost some of its shin.

Gold declined by Rs 190 to Rs 31,950 per 10 grams in the bullion market today, while silver lost Rs 800 to Rs 60,400 per kg.

Both the precious metals' fell for a third successive day due to weak demand and soft global prices.

Gold declined in global markets as some investors sold the yellow metal after its rally to the highest level in more than six months.

Gold futures dropped today as much as 1.1% before trading down 1% at US$1,759.50 an ounce as a stronger dollar took a toll on commodities across the board.

They had risen to US$1,790 an ounce on Sept. 21 in New York, the highest since Feb. 29.

In the currency markets, the euro fell for a fifth straight day against the yen after a gauge of German business confidence unexpectedly dropped in September.

The 17-nation currency declined to a one-week low versus the dollar after German Chancellor Angela Merkel and French President Francois Hollande clashed over the weekend on a timetable to introduce joint oversight of euro-area banks. 

The dollar index, which measures the US currency against a basket of six major currency rivals, jumped 0.4% to 79.67 from 79.278 late on Friday.

A stronger dollar is negative for commodities priced in the US currency, including metals as it makes them more expensive to holders of other currencies.

The yen strengthened versus all its major counterparts amid renewed demand for safe haven assets. 

The Australian dollar weakened on speculation growth in China, its biggest trading partner, is worsening.

Gold outshines equity, other asset classes: ASSOCHAM