A firm overseas trend on Thursday helped gold recover by Rs 100 to Rs 17,300 per ten gram in the bullion market here on fresh buying by stockists amid marriage season demand.
In New York, gold rose to an all-time high of $1,782.50 an ounce.
Good monsoon, farm loan waiver -- the two key reasons behind more customers in jewellery shops
Surging gold prices set yet another record of Rs 15,800 per 10 gram in the national capital on Thursday in line with the surging global bullion markets on speculation that the global recession will deepen further.
The government took steps to curb imports of gold after concerns about the country's current account deficit.
The World Gold Council (WGC) said the recent fall in gold prices was driven by speculative traders in the futures markets.
Higher silver demand in the world's biggest buyer may help support prices, which have fallen almost 30 per cent this year on the international market.
The precious metals continued its uninterrupted rally.
Gold is usually seen as a safe-haven when stocks are falling or when inflation is rising. With prices of the yellow metal hovering near record highs, people are also putting off their jewellery purchases. Along with a subdued marriage season, the orders with price open and settled on delivery day, too, are getting cancelled. Apart from high, volatile prices, there is no gold rush yet for the safe-haven asset, crimping demand.
The all-time high price of silver is Rs 75,000 a kg, recorded in April 2011.
Gold also moved up by Rs 70 to Rs 20,430 per 10 grams on rising jewellery demand, reaching nearer to its record level of Rs 20,600 per 10 grams set on November 11.
The import tariff value -- base price at which customs duty is determined to prevent under-invoicing -- is revised on a fortnightly basis.
Gold in Singapore, which normally sets the price trend on the domestic front, fell by 1.4 per cent to $1,278.94 an ounce and silver by 2.8 per cent to $19.55 an ounce.
Traders said a weakening trend in the precious metals overseas after the Federal Reserve pressed on with cuts to stimulus amid signs of a recovery in the US, reducing demand for the safe haven, mainly put pressure on the gold prices in New Delhi.
Silver also reclaimed the Rs 34,000 per kg mark.
Traders said sentiment turned bearish on emergence of stockists selling at existing higher levels amid weak global trend as improving economic growth reduced demand for the precious metals as an alternate investment.
After losing Rs 730 in last six sessions after the Reserve Bank of India eased imports curbs by scrapping 80:20 scheme, gold staged a strong comeback by rising Rs 840 to close at Rs 27,040 per ten grams, a level last seen on October 30.
Traders said sustained buying by stockists and retailers for the ongoing marriage season mainly led an upward trend in precious metals.
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Attributing the high Current Account Deficit to mainly gold import, Chidambaram said the inward shipments of the precious metal resulted in outgo of $50 billion.
Gold in Singapore, which normally determines price trend on the domestic front, lost 0.90 per cent to $1,132.16 an ounce, the lowest since April 2010 and silver dropped by 2.3 per cent to $15.06 an ounce, the lowest since February 2010.
Bullion traders said a weakening trend in global markets, as the dollar's strength eroded demand, mainly put pressure on the precious metal.
Traders said sustained selling by stockists on the back of sluggish demand mainly kept pressure on precious metals.
Rate in the global markets us normally sets price trend on the domestic front.
Nearly two-thirds of India's gold demand comes from rural areas where jewellery is a traditional store of wealth for millions who have no access to the formal banking system.
Gold on Monday fell by Rs 50 at Rs 16,020 per 10 gram in the bullion market on selling by stockists, sparked by a weakening global trend.
Gold coins are selling at a Rs 100 per 10 gram premium since Guru Pushya Nakshatra, one of the most auspicious occasions for buying precious metals in western Indian states.
The demand for the precious metal declined as the prices hovered between Rs 14,500 to Rs 15,000 per 10 grams level in the domestic markets, Bombay Bullion Association president Suresh Hundia told PTI from Mumbai. Multi Commodity Exchange October gold was ruling at Rs 14,865 per 10 grams on Monday, while in global markets it was at $935.8 an ounce (28.34 grams).
Gold import stood at 18 tonnes in May, according to the data provided by the Bombay Bullion Association. Gold prices ruled over Rs 14,600 per 10 grams level in both spot and futures markets last week. In the international markets gold prices were at 938.55 an ounce (28.34 grams).
Trading sentiments turned bearish after gold shed 0.4 per cent to $1,529.85 an once from $1,540.78 on Tuesday, the highest level since May 4, in the global markets, as investor concern eased that Greece may become the first euro country to default, paring demand for the precious metal as a haven.
Indians are no more rushing to buy bullion after this week's sharp sell-off
On the domestic front, gold of 99.9 and 99.5 per cent purity plunged further by Rs 375 each to Rs 28,350 and Rs 28,150 per 10 grams, respectively. Sovereigns continued to be asked around previous level of Rs 24,400 per piece of eight grams in scattered deals.
Gold declined by Rs 190 to Rs 31,950 per 10 grams in the bullion market in New Delhi on Monday, while silver lost Rs 800 to Rs 60,400 per kg on subdued demand at higher levels.
Poor demand at existing higher levels further dampened the trading sentiment, traders said.
Government measures and rising gold price decreased demand for the noble metal.
Gold will first slide to $1,310-1,325 early next year on profit booking. But, the precious metal will get good buying support from central banks in Asia and West Asia regions, who are looking for opportunities to increase their gold portfolio.
A rise in import duty could be a reason for increase in illegal consignments, say experts.
Industry representatives say the government may be tempted to raise the duty on gold and silver by Rs 100 per 10 gram and Rs 500 per kg, respectively, to earn extra revenue at a time the economy is facing several challenges.
Gold futures for February delivery closed at in the red on weekly basis after reaching a record $1,432.50 an ounce on December 7. This week, the gold dropped 1.51 per cent or $21.30, the most since mid-November on concern that China may tighten monetary policy eroded demand for precious metals.
Traders said some demand for the festive season mainly supported the rise in prices of both the precious metals.
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