Trading sentiment turned bullish on retail buying for the ongoing marriage season and reports of the yellow metal surging in overseas markets.
Gold has jumped almost 16 percent this year in foreign markets as record energy prices prompted buying of the metal as a hedge against inflation.
Crude oil rose to a record $70.85 a barrel on August 30, a day after Hurricane Katrina disabled most US oil production in the Gulf of Mexico.
Investors buying gold as an alternative investment and as a hedge against rising energy prices, which may lead to inflation.