Gold prices in the domestic market touched a new peak level at Rs 15,650 following increase in its prices in the international market due to heavy purchase by investors.

The precious metal started rising after the breakout of global financial crisis due to failure of leading financial institutions in United States. Global slowdown propelled investors to invest in gold considering it as a safest mode of investment due to plunge of stock markets and low interest rate regime.

Continuing its journey towards making news heights, gold on Thursday made a new record high of Rs 14,900

The gold prices increased 4.6 per cent to Rs 14,146 per 10 gram due to large interest of investors in the yellow metal in the midst of economic uncertainty and strong position of dollar against other major currencies. The prices touched a three-month high of $930 an ounce in the international market, confirming it as the safest investment mode under current economic environment.

An analyst with Anand Rathi Commodities, Subodh Gupta said, "The economic uncertainty in Europe, and the strong dollar is making gold attractive as a safe-haven investment rather than a hedge against inflation."

Following the yellow metal's recent rise to three-month high, on Thursday India's gold futures extended losses for a second day on profit-taking.

Debjyoti Chatterjee, associate vice-president with MAPE ADMISI Commodities in Mumbai said, "An absolute decline in demand from India would also weigh on prices."

In January 2009, India's gold imports dropped more than 90% to just 1.2 tonnes, from 18 tonnes during the same month last year, in the midst of high prices and ample stocks. The news came from Bombay Bullion Association on Thursday.

On Friday, when dollar slid due to economic worries and signs of strengthening in investment demand as the recession deepened, it enhanced appeal of gold as an alternative investment. The futures contracts for Gold ended higher.

Since disruption turmoil in the financial markets and fears over the outlook for the global economy boost bullion's appeal, the demand for investment in the precious metal remains strong. In the recent times, demand for physical gold from ETFs has been a major factor supporting prices.

Bombay Bullion Association has declared that India's gold imports fell 26-35 percent in November as high prices ruled out any chance of reviving the sagging demand during the wedding season.

Suresh Hundia, president of the Bombay Bullion Association said, gold imports by India, the world's biggest consumer of the metal, were around 35-40 tonnes in November, compared with 54 tonnes in the same month a year earlier.