Gold touched an all-time high on Thursday, aided by a spurt in the rupee that touched a six-month low, but the World Gold Council (WGC) said higher demand was ahead, while investors fretted on whether the metal was still worth investing in.
Experts meanwhile advised caution, saying the dizzy rally has reached worrying highs.
Earlier, the yellow metal hit a record high above $1,816 an ounce in London, as demand for the safe haven investment rose on resurgent worries about a possible new recession.
Following the firm global trend, gold prices hit a new all-time high of Rs 27,154 per 10 grams on the Multi Commodity Exchange for October futures.
According to the WGC, the Indian demand for gold in value terms increased 70% in the second quarter and 38% in absolute terms (tonnes) against the same period in 2010.
"Prospects for Indian market for the remaining year remain optimistic. We expect the demand from India to benefit from a range of supporting factors including relatively economic prosperity, high inflation rates, good monsoon and number of festivals," the WCG said.
Analysts, however, preferred to take the cautious route. "There have been commodity bubbles in the past and there could be one this time around too, but it does not look so in near future. But to secure oneself investors should not have an exposure of more than 5% of their net worth in gold," said Vir Sardesai, of Sardesai Finance, a financial planning firm.
There are also concerns that there could be a minor correction in the prices of the yellow metal in the short-run.
"There could be a moderate corrections in the short-run. But in the long run we are still bullish on gold," said Hitesh Jain, commodity analyst, IIFL.