In addition, depreciating rupee in the forex market, which makes imports costlier, also influenced the prices.
Silver also saw a hefty rise of Rs 900 to Rs 42,100 per kg on increased offtake by industrial units and coin makers.
Sentiments turned bullish after gold rose to two-week high in global markets as concerns that a US recovery may be stalling and escalating tensions in Iraq boosted demand for the safe-haven, traders said.
Gold in Singapore, which normally sets price trend on the domestic front, rose 0.2 per cent to USD 1,275.65 an ounce, the highest level since May 27 and silver by 0.5 per cent to USD 19.63 an ounce, the highest since May 26.
In Delhi, gold of 99.9 and 99.5 per cent purity went up by Rs 360 each to Rs 27,600 and Rs 27,400 per ten grams, respectively, while sovereign gained Rs 100 to Rs 24,500 per piece of eight grams.
In line with a general firm trend, silver ready spurted by Rs 900 to Rs 42,100 per kg and weekly-based delivery by Rs 770 to Rs 41,370 per kg.
Silver coins also flared up by Rs 2,000 to Rs 77,000 for buying and Rs 78,000 for selling of 100 pieces.