Domestic gold prices are likely to witness their all-time high of Rs 67,300 (per 10 tola bar, or 165.5 grams) this week following reports of the US Navy mounting pressure on Iraq.
The global markets are expected to see a relentless surge on opening this week after a long Christmas weekend.
Gold prices in India reached a fresh six-year high of Rs 66,200 last week, and a spurt in global prices early this week could send prices to an all-time high.
Prices will breach their high in India ahead of the global all-time high of $414.80 per ounce registered on February 5, 1996, because of the depreciation in the rupee since then by around 25 per cent.
The dollar-rupee rate was 37.03 on that date, while it was at around 48.03 on Friday.
"It will take about a $15 jump in global gold prices to spark an all-time high in India," independent gold analyst Dinesh Parekh said.
Gold gained support after Washington declared that Iraq was in 'material breach' of the UN arms resolution.
A steadier dollar, weaker oil prices, mild stock market gains and selling in Japanese gold futures weighed on bullion last week and is likely to continue thus in the coming days.
The global markets witnessed gold prices reaching their six-year high on stronger possibilities of the US attacking Iraq and the weakness of the dollar against the euro.
However, on Friday, gold came off its highs on squaring up of positions ahead of Christmas holidays.
But the situation is likely to be tense after Saturday's reports of the US Navy getting closer to the Gulf.
Often a sanctuary in times of trouble, gold has soared more than 28 per cent this year, fired by fears of another war in the Persian Gulf, a weaker dollar, falling stock markets and rising oil prices.
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