Gold for Oct delivery was trading at Rs 30,378 on the MCX, up Rs 388 from its previous days close. Silver too rallied by a huge 3% on the MCX with the metal trading at Rs 51,215, up Rs 1,638 over Wednesday's close.

Late on Wednesday, the US Federal Reserve announced that it would continue to buy bonds aggregating $85 billion-a-month. Investors and analysts had expected that the Federal Reserve would reduce its bond buying programme by at least $10 billion.

Reduction in its bond buying programme would reduce liquidity, which in turn has an impact on gold prices.

The Fed has been buying bonds to the tune of $85 billion in the US, to push economic growth and reduce unemployment in the US. However, a lot of this money has found its way into stocks and gold, which is why gold has rallied sharply today.

Spot gold hit its highest level since Sept 11 of $1,367.86, an ounce.

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