As US-Iran tensions escalate into fears of possible nuclear war, gold shines as the safe-haven metal in times of geopolitical tensions. On MCX, gold futures (5 February 2020) climbed 2 percent to a new all-time high of Rs 41,096 per 10 grams on Monday.
In the international market, the yellow metal surged closer to its 7-year peak, as spot gold rallied 1.8 percent to touch $1,579.72 an ounce, its highest since 10 April 2013.
The precious metal is often seen as an alternative investment during times of political and financial uncertainty. Risk-averse market sentiment has caused a large number of investors to seek refuge in gold.
Further, Goldman Sachs added to the demand for the safe-haven metal as it maintained its three-, six- and 12-month forecast for gold at $1,600 per ounce.
It also said that the metal is a better hedge than oil in the prevailing uncertainty around the extent of escalation in tensions in the Middle East.
"The range of potential scenarios is very large; spanning oil supply shocks or even oil demand destruction - which would be negative to oil prices," the bank said in a note.
In India, a weaker rupee made gold additionally expensive for buyers. Rupee slide past 72/dollar mark on Monday to hit its lowest in almost two-months as oil prices surged. When oil prices rise, a larger import bill will put pressure on India's current account deficit and in turn weakens the rupee.