Silver also shot up and retraced the Rs 43,000 per kg level on firm speculative buying coupled with sustained industrial demand.
Standard gold (99.5 purity) climbed by Rs 325 to close at Rs 27,650 per 10 grams from last Saturday's closing level of Rs 27,325.
Pure gold (99.9 purity) also rose by a similar margin to conclude at Rs 27,800 per 10 grams from Rs 27,475.
Silver (.999 fineness) surged by Rs 545 to finish at Rs 43,150 per kg as against Rs 42,605 previously.
Globally, gold hit its highest level in nearly 3 weeks in early trade, as turmoil in Iraq and Ukraine supported its safe-haven appeal relative to higher-risk assets like equities.
Investors often turn to gold or other precious metals in times of political or financial trouble as they are perceived as an insurance against risk.
Spot gold rose to USD 1,280 an ounce in early European trade, having hit its highest since May 27 at USD 1,284.85. Silver rose to USD 19.72 an ounce.