KARACHI, Feb 26: Gold prices soared to Rs13,314 per 10 grams on Monday, amid rising tension between Iran and the US and weakening of dollar against euro and other currencies.

Despite the fact that there is no surge in demand for precious metal in the domestic markets some trading houses prefer investment in the metal over other investment avenues at this juncture.

The unabated rise in gold prices in the world markets, however, continues with gold prices approaching $700 an ounce.

Gold prices in the domestic market surged by Rs143 per 10 grams to Rs13,300 on Monday from Rs13,157 last Saturday, taking net rise in the precious metal price to Rs570 from the beginning of this month when it was being quoted at around Rs12,730 per 10 grams.

A dealer in gold told Dawn that traditionally, gold buying in the month of Safar was slow and people defer their purchases to next month but the rapid rise in number of western countries naval flotillas in the Gulf is raising concern amongst investors, who see it as a global security risk which will trigger increase in oil prices.

The consistent rise in gold prices for the last two months indicates that investors perceive it to be a save heaven under given circumstances when global security is at risk and oil prices are expected to surge once western powers take a definitive decision over the Iranian nuclear programme.

Gold prices on the world markets have shown some 14.5 per cent rise since early January, as it is only $40 away from 26-year high last year when the metal price soared to $730. In the western markets the metal on Monday, hit high at $689 an ounce but retracted to $685.60.

Other factors triggering gold prices move higher is weakening of dollar against euro and some other major currencies with oil prices making fresh upward gains from $61 a barrel. The slump in domestic real estate market and uncertainty gripping capital markets have forced some investors to go for save investment in gold, which is still below world market rates.

In the absence of a proper mechanism and monitoring of trade in gold it is always difficult to quantify the volume of trading in the domestic market, a leading gold dealer said. Some big business houses, however, he said, are active in the gold market as the prices are still below the world markets, he added.

Gold prices in Dubai are higher than the prices being quoted in domestic markets like Karachi, Lahore, Hyderabad and Faislabad. Consequently, some investors are taking advantage of this margin and prefer to invest in gold than in any other mode. Later in the evening gold prices in the domestic market were reported to have moved further to Rs13,314 per 10 grams.