Gold prices soared by Rs 400 to reclaim the Rs 27,000 level amid a firm trend in the metal prices overseas.
At the Indian bullion market, the yellow metal ended at Rs 27,250 per 10 gram on Friday, posting gains for the third consecutive session and reaching its highest level in the past one month.
The precious metal has remained strong since last week after the US Federal Reserve delayed raising interest rates for the first time since the global financial crisis of 2008.
In the international markets, gold prices traded above $1,153.80 a troy ounce on Thursday on the back of weakness in global equity markets.
However, the prices came slightly under pressure after the Fed Chair Janet Yellen said that the US central bank is on track to hike rates this year.
"Just last week, the Fed cited international developments as a reason to hold off raising rates, but we suspect that market reaction was so negative that the central bank is now backpedalling," INTL FCStone analyst Edward Meir told The Bullion Desk.
On the other hand, an official data showed China's net gold imports doubled to 59.3 tons in August on an annualised basis, which is a positive sign for the metal prices.
"Because China is now facing a period which traditionally sees the highest demand for gold – it begins with "Golden Week" in early October and continues until the New Year Festival in early February – gold imports should also continue to rise in the next few months," said Commerzbank Corporates & Markets in a note.
Meanwhile, a sharp rise in gold prices in the domestic market is partly supported by increased demand from jewellers ahead of the wedding season.
Silver prices also zoomed by Rs 1,100 to close at Rs 36,500 per kg due to increased industrial demand.