In the international markets, spot gold prices surged more than 1 per cent to a 5-month high of $1,269.28 per ounce, its highest since November 10. US gold futures also rose over 1 per cent to $1,266.20.
"Clearly this raises the stakes and we expect to see gold prices continuing to push higher in the short-term, at least until there is some clarity around whether this is a one-off or develops into something more," ANZ analyst Daniel Hynes said.
Besides the risk-aversion sentiment in the market, gold is also supported by technicals, analysts said.
"Gold has broken the 200-day moving average intra-day and has tested its upper resistance at $1,264, the February 28th high. A daily close above these levels can open a technical move to $1,300 with support now at $1,250," Halley said.
Meanwhile, rupee rose to a 20-month high of 64.33 against the dollar, which capped domestic gold price gains to an extent. Domestic gold prices depend on international spot gold rate and rupee/dollar exchange rate.
(With agency inputs)