Indian gold futures hit a record high on Jauray 13, tracking gains in overseas market and weakness in the dollar index.
However, the rise in price dampened demand in the world's second biggest consumer of the precious metal.
Local gold futures rose to 56,245 rupees per 10 grams, surpassing the previous record of 56,191 rupees hit in August 2020, signalling that the yellow metal is getting traction among buyers as a safe investment bet.
Also watch: Commodities LIVE: Gold surges to multi-month highs
The rally in gold prices started in early November on signs that the US Federal Reserve was turning less hawkish on its monetary policy stance. Cues from the US Fed on slowing of interest rate hikes on the back of cooling of inflation has also led to prices spiralling up.
The US central bank is likely to dial down on the quantum of jumbo rate hikes on the back of CPI inflation moderating to 6.5% - a primary driver of gold prices that touched a record high today.
Strong buying by hedge funds and money managers has also kept the sentiment high. Going forward, demand ahead of the domestic wedding season and global recessionary fears will keep the momentum upbeat for gold prices.
In the last seven global recessions, average return on investment in gold averaged to nearly 20 percent.