Indian gold futures extended gains to their highest level in two weeks after the finance minister hinted at making imports of the yellow metal expensive, triggering speculative buying from physical traders on rumours of a custom duty hike.
Worried by ballooning current account deficit, the minister hinted at making gold shipments more expensive, saying it was under the government's consideration, but he did not elaborate on the types of measures.
The most-active gold for February delivery on the Multi Commodity Exchange (MCX) hit a high of 31,191 rupees per 10 grams, a level last seen on December 18. It was 0.35 percent higher at 30,997 rupees as of 0945 GMT.
"The comment (from the finance minister) added more interest to the physical market," said a dealer with a private bullion importing bank in Mumbai, adding there were a few deals on a stronger rupee in the morning.
A firm rupee, which plays an important role in determining the landed cost of the dollar-denominated yellow metal, kept the upside limited.
In the overseas market, gold rebounded from intraday lows after the U.S. Congress finally passed a bill that avoids tax hikes and spending cuts worth $600 billion, but the temporary reprieve drew muted reaction from bullion investors in Asia.
Silver also jumped to its highest level in a week. Silver for March delivery touched a high of 58,440 rupees, its highest since December 27.