The broader markets also turned lower with the BSE Midcap and Smallcap indices falling 0.3-0.5 percent. The market breadth was weak too as about two shares declined for every share rising on the Bombay Stock Exchange.
The government has rolled back its Budget decision to apply 1 percent tax on cash purchase of gold jewellery.
The jewellers had earlier been on a 45-day strike after Finance Minister Arun Jaitley in his Budget speech in February proposed 1 percent excise tax on non-silver jewellery.
Successive governments have struggled to curb appetite for gold in Asia’s third largest economy, despite the imposition of a 10 percent import duty in 2013 and other restrictions.
The government imposed an excise duty in 2012, but was forced to roll it back after jewellers went on a strike.