Rising concerns about inflation, weakness of the US dollar, the main currency in which most precious metals are traded globally increasing demand for the yellow metal during the current wedding season have combined to take gold prices to record levels almost every day, reports Economic Times.

Since breaching the Rs 17K level (per 10 grams) for the first time ever just a week ago, the yellow metal has gained about Rs 800 and is now within striking distance of Rs 18,000.

On Monday, standard gold in Delhi closed at Rs 17,810 while in Mumbai it closed at Rs 17,610. The rally in the domestic market was also helped by the global rally since gold prices are mostly benchmarked to international levels.

The precious metal yesterday hit a high of USD 1,171 (per ounce) in New York. Lately, the global surge in the yellow metal was also helped by the decision of the Reserve Bank of India to buy 200 tons of gold from the international market.

While the RBI`s recent buy will go into its reserves, India as a country remains the biggest consumer of gold. So far this year, international gold prices have gained 32% and also crossed record highs several times.

It is learnt that international gold prices may hit USD 1,200-level in a couple of months.

Gold has always been seen as a hedge against both economic uncertainty and inflation. The current uncertainty over the recovery of the global economy is also one of the reasons for the yellow metal`s rally.

Market players pointed out that in India gold could have easily crossed the Rs 18K mark if the Indian currency had not appreciated against the dollar. Over the last one month, the rupee has gained 16 paise against the dollar to its Monday close at 46.49. In between, on November 3, it had fallen to 47.42.