Gold prices soared on Monday as risk aversion sentiment in the wake of the terrorist attacks in Paris boosted the safe-haven demand of the metal.
The yellow metal prices rose sharply by Rs 235 to end at Rs 26,150 per ten grams at the bullion market, posting a rebound from a sell-off seen in the past two sessions. Silver prices also gained Rs 300 to close at Rs 34,600 per kg.
In the overseas markets, the precious metal prices rose to as high as $1,100 per troy ounce, as investors bought the metal due to its safe-haven status in risk-off environment.
"Gold is again trading at a weekly high of just shy of $1,100 per troy ounce and is thus clearly profiting from its reputation as a "crisis currency" in the wake of the Paris terrorist attacks," said Commerzbank Corporates & Markets in a note.
The metal prices were also underpinned by weak US economic data released on Friday that lessened the expectations over interest rate hike by the US central bank in December.
"According to the Fed Fund Futures, the market sees the probability of a first rate hike next month as being 62%, as compared with 70% last week," said Commerzbank.
Sentiments in the precious metal markets was dampened after a slew of economic data in the US showed that the country's labour market remains robust enough for the US Federal Reserve to raise policy rate as early as next month.
Earlier this month, in her Congressional testimony, US Federal Reserve chairperson Janet Yellen had hinted at monetary tightening next month.
"While increased expectations for an early rate hike would be negative for gold in the short term, we suspect that once a rate hike occurs the gold market could begin to recover from recent declines," The Bullion Desk quoted HSBC analyst James Steel, as saying.