Somasundaram PR, managing director of the WGC's Indian operations, said on Tuesday Prime Minister Narendra Modi's move to scrap 500 and 1,000 rupee banknotes - a 'demonetisation' crackdown on corruption and tax evasion - will boost larger jewellery retailers' market share from 30 percent in 2015.
Silver also shot up by Rs 350 to Rs 40,750 per kg due to increased offtake by industrial units and coin makers.
Globally, gold firmed as a retreat in the dollar from the previous session's 14-year peak prompted some buyers to hunt bargains after the metal's sharp slide from its November high.
Gold prices recovered by Rs 65 per 10 grams at the bullion market today followed renewed demand from stockists and investors driven by bullish global cues.
Lower scrap supplies could force the south Asian country to raise imports, which will support global prices that are near their lowest level in 5-1/2 months.
Gold slipped from a 30-month high, plunging Rs 250 to Rs 31,300 per 10 grams at the bullion market today, as demand from jewellers at domestic spot market fell amid a weak trend overseas.
Bullion has risen nearly 1 percent this week on expectations that the US Federal Reserve will keep its cautious stance towards interest rates in the wake of global economic concerns.
Gold prices spurted to Rs 31,340 per 10 grams, a 29-month high, by surging Rs 540 in the bullion market today, tracking a firm trend overseas amid increased buying by jewellers at the domestic spot market.
Gold demand in Asia remained sluggish this week as higher prices continued to deter physical traders from making fresh purchases, with discounts in India widening to a record high
Gold on June 27 extended the biggest surge in seven years as the fallout from the Britain's decision to exit the European Union boosted haven demand
Gold for delivery in June dropped Rs 140 or 0.48 percent to Rs 29,160 per 10 gram in a business turnover of 971 lots at the Multi Commodity Exchange.
Spot gold was little changed at USD 1,226.41 per ounce by 0033 GMT. The metal fell to USD 1,223 earlier in the session, the lowest since April 7.
Sentiment remained largely lacklustre, in tune with a sluggish global trend, as investors weighed prospects of a US interest rate rise, which strengthened outlook for the dollar and dented the metal's appeal.
At Multi Commodity Exchange, gold prices for delivery in far-month August fell Rs 89, or 0.30 percent, to Rs 29,860 per 10 grams in business turnover of 83 lots.
Spot gold edged down 0.1 percent to USD 1,247.30 per ounce by 0056 GMT. The metal fell to USD 1,242.63 an ounce, the lowest since April 28 on Monday.
Bullion has been under pressure since the Fed released the minutes of their April meeting last week that showed officials believe the US economy could be ready for another interest rate increase next month.
In futures trading at Multi Commodity Exchange, gold for delivery in June fell Rs 279, or 0.93 percent, to Rs 29,776 per 10 gram, in a business turnover of 13,815 lots.
Spot gold was little changed at USD 1,258 per ounce at 0038 GMT. The metal fell 1.7 percent in the previous session, hitting a three-week low of USD 1,254.65.
Bullion traders said sentiment remained bearish largely in tandem with a weak global trend where gold snapped three days of gains after strong inflation data that fuelled talk of an interest rate hike.
Spot gold was little changed at USD 1,278.65 per ounce at 0042 GMT, after gaining 0.5 percent on Tuesday.
Silver also eased by Rs 160 to Rs 41,100 per kg on lack of buying support from industrial units and coin makers.
At the Multi Commodity Exchange, gold for delivery in June was trading higher by Rs 77, or 0.26 percent, to Rs 30,054 per 10 gram, in a business turnover of 634 lots.
The dollar firmed on Tuesday as a recovery in crude prices lifted equities and US Treasury yields, and lessened demand for the safe-haven yen.
Gold for delivery in June was trading higher by Rs 67, or 0.22 percent, to Rs 30,101 per 10 gram with a turnover of 1,113 lots at the Multi Commodity Exchange.
Spot gold gained 0.4 percent to USD 1,277.7 an ounce by 0244 GMT, while US gold futures added 0.5 percent to USD 1,279.5 an ounce.