Inflationary fears as well as Russia-Ukraine conflict pushed gold prices to Rs 55,000 per 10-gram on Tuesday.
The fears of supply shortages due to the Russia-Ukraine conflict along with robust demand has kept prices higher. Sanctions on Russia, which is a major producer of gold, is expected to reduce the supply.
Besides, a sell-off in equity markets by FIIs has triggered a rush for safe haven investment. The FIIs net sold Rs 8,142.60 crore worth of equities.
Last week, MCX gold prices had increased sharply by 4.66 per cent to Rs 52,559 levels.
Besides, international 'Spot Gold' prices increased to $2,057 per ounce.
"Geo-political tensions as well as foreign fund outflows from the equity markets led to a rush for safe haven investments such as gold," said Anuj Gupta, Vice President, Research, IIFL Securities.
"Gold prices in international markets may test $2,100 to $2,130 very soon. In the domestic market, it might test Rs 56,000 to Rs 58,000 per 10-gram," Gupta added.
According to Kshitij Purohit, Lead of Commodities and Currencies at CapitalVia Global Research: "$2,074 is all-time high... If it breaks this level, then expect a next level of $2,100 to $2,150 in the short term."