Experts say that due to rupee depreciation against the dollar, gold prices will continue to rise. The benchmark index had gained as much as 1.3 per cent during the session, tracking overnight rally in USA stocks.
As per experts, gold is considered to be a safe investment at time of political and economic uncertainties.
For the week, spot gold has gained about 2%, heading for a fourth consecutive weekly increase. USA gold futures gained about 1% to US$1,543.30 per ounce.
Political tension between the United States and Iran worsened today as the Iranian Quds Force chief Major-General Qassem Soleimani and a top Iraqi commander Abu Mahdi al-Muhandis were killed in a United States airstrike at the Baghdad airport.
The gold/silver ratio, that refers to the amount of silver required to buy an ounce of gold was at 84.70 to 1.
In futures, MCX Gold for February contract gained 1.87 per cent with last quoted price of ₹40,010 per 10 gram. CME Gold futures, meanwhile, hit a recent high of $1,548 an oz during intra-day, while it last quoted at $1,541. Gold prices will move upside towards Rs 40,000 and silver towards Rs 48,000, it said.
The focus on geopolitics meant markets paid little attention to stronger-than-expected data from France, where inflation rose 1.6% year-on-year in December, beating analyst expectations for a 1.4% rise.
Airline stocks fell broadly on the threat of higher oil prices.
Gold jumped to the highest in nearly four months as tensions in the Middle East flared after a USA airstrike, spurring demand for haven assets.
The overall market breadth was only marginally negative as 1,300 stocks lost ground on the BSE, against 1,213 gainers.
Sunilkumar Katke, Head - Commodities & Currency, Axis Securities pointed out that bullion is building on a 2020 rally on a weakening rupee and geopolitical concerns following the USA airstrike in Baghdad. Prices rose 18 per cent past year, the biggest annual advance since 2010.
Platinum futures climbed as much as 1.7 per cent to US$1,001.40 an ounce in NY, reaching the highest for a most-active contract since February 2018.
A correction from the current level may be limited to $1,531.
"A continuation of the positive trend scenario will see gold prices test the next main station at $1,540", Lu added.