Gold prices plunged by Rs 245 ending below the Rs 27,000-mark on Friday, tracking the metal's weakness in the overseas market amid growing expectations of interest rate hike by the US central bank in December.

The yellow metal prices ended at Rs 26,830 per 10 grams at the bullion market, hitting levels not seen in the past two weeks.

Silver prices also fell sharply by Rs 735 to Rs 36,630 per kg on the back of reduced demand from industrial units and coin manufacturers.

"Gold and silver are still trying to digest Wednesday's unexpectedly hawkish Fed statement," said Commerzbank Corporates & Markets in a note.

In the overseas market, the precious metal prices traded at a three-week low of 1,143 per ounce, extending losses for the second consecutive session, after the US Federal Open Market Committee (FOMC) maintained a more hawkish stance at this week's meeting.

Concluding its two-day meeting on 28 October, the US Federal Reserve had kept the federal funds target range unchanged 0-0.25%, but indicated that it remained on track to hike rate by the end of 2015.

"The Fed left the door open for a December rate hike as it downgraded its worries about global economic and financial developments while also stating the hurdles involved when determining the appropriateness of hiking rates "at its next meeting", said Nordea Markets in a note.

The metal prices traded a two-week high of $1,183 per ounce before the release of FOMC statement on Wednesday, but gave up all the gains later.

"We suspect that the short-term outlook for the gold is somewhat negative, as the complex faces the dual headwinds of a rising dollar, a more 'antagonistic' Fed, a surging US equity complex and deteriorating chart patterns," INTL FCStone analyst Edward Meir told thebulliondesk.

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