Gold fell to a two-week low in heavy trade on Thursday, slipping below $1,000 an ounce as the dollar rallied amid a wave of risk aversion, decreasing the appeal of gold as a currency hedge. The dollar regained some ground after major central banks including the U. S. Federal Reserve announced plans to scale back emergency lending. Silver futures were badly hit following the fall in gold, paring over 3 percent from their previous close.

Gold buying by India, one of the world's largest consumers, picked up due to the festival season when people traditionally buy ornaments as gifts.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings fell to 1,094.107 tonnes as of Sept. 24, down 0.7 percent from 1,101.735 tonnes the previous business day.

The dollar index jumped more than 1 percent against a basket of major currencies. Gold is generally used as a hedge against the depreciation of dollar-denominated portfolios.

U. S. Labor Department said new claims for unemployment benefits unexpectedly fell 21,000 to a seasonally adjusted
530,000 last week.

The timing for plans to unwind emergency economic support is a key issue for investors as the G20 leaders seek ways to nurture the recovery from the recession and build safeguards against future catastrophes.

Fresnillo, the world's largest primary silver producer, sees silver prices at between $13 and $15 per ounce, the company's chief executive officer said on Thursday.

We do not expect a further downside in precious metals after yesterday's correction. The focus for the day would be on the movement of dollar which may slide against the basket of currencies on the back of a fall in risk aversion following healthy economic data from the U. S. We may witness slight upside in gold today.