Delhi was leading the rally, rising the most by Rs 550 to Rs 31,725 per ten gram followed by Kolkata with Rs 540 to Rs 31,715. The metal in Mumbai spurted by Rs 520 to Rs 31,400 and in Chennai by Rs 540 to Rs 31,575.
Sentiment was boosted after Federal Reserves Chairman Ben S. Bernanke indicated more measures to aid the U.S. economy, which will increase the demand for gold as it is considered hedge against inflation.
Gold, silver futures at MCX edged higher on Saturday tracking firm overseas trend.
On Friday international gold surged 2% to a five-month high on hopes that Federal Reserve Chairman Ben Bernanke at Jackson Hole, may signal over further monetary easing to support growth in the world's largest economy.
Back in India, gold futures at the MCX, for the October 2012 contract, were trading at Rs 31,348 per 10 gram, higher by 0.46% after opening at Rs 30,800, against a previous close of Rs 31,246.
MCX silver futures edged higher by Rs 646 per kg, and was trading at Rs 59,050 per kg.
The latest government data showed that gold imports in India which is one of the largest buyers of the precious metal declined by 18.4 % to Rs 71,912 crore during Q1 of the current financial year on account of a steep surge in the prices.