Gold prices in the country have risen to surpass the psychologically important level of Rs. 31,000 per 10 g as demand increased from investors and market speculators.

The gold price rose Rs. 640 per 10 g to close at Rs. 31,470 per 10 g compared to the closing price of Rs 30,830 per 10 g on Friday. Standard gold for spot delivery jumped 2.05 per cent or Rs 630 to close at Rs 31,325 per 10g in Mumbai. The gold prices had fallen significantly in the previous months as the government took steps to reduce import in order to control its deficits. Gold traders in India expressed concerns over the restrictions placed by the government.

The Reserve Bank of India (RBI) has placed the restriction on the banks with an aim to curb gold imports and reduce the large Current account deficit of the government. The RBI has said that the high CAD is the biggest risk to the Indian economy at present and hinted that if the worrying trend continues then the monetary policy might be reversed.

Investors' confidence in other assets remains low as their re giving negative returns so increasing number of investors are turning to gold for parking their funds.