Gold rallied to scale two-month peak at the domestic bullion market today on frantic buying in the backdrop of the government's decision to raise import duty on the metal.

Silver also rebounded sharply on aggressive speculative buying.

Stockists, jewellers and retail consumers went on a buying spree fearing gold prices will rise substantially following the Centre's move yesterday to raise import duty on the metal to 8 per cent from 6 per cent in a bid to rein in demand in view of widening current account deficit.

The move comes a day after the RBI extended the curbs on gold import to other agencies in addition to banks.

Standard gold of 99.5 per cent purity shot up by Rs 465 to conclude at Rs 27,570 per 10 gm from Wednesday's closing level of Rs 27,105.

Pure gold of 99.9 per cent purity jumped by Rs 475 to finish at Rs 27,705 per 10 gm from Rs 27,230.

Silver ready (.999 fineness) rose by Rs 300 to end at Rs 45,295 per kg from Rs 44,995 yesterday.

Meanwhile, globally, gold gained marginally despite sluggish US economic data amid fears of slowing bullion demand in India, one of the largest consumers of the shiny metal.

Gold for August delivery up USD 1.30 to settle at USD 1,398.50 an ounce on the Comex division of the NYMEX late yesterday and July silver gained marginally to USD 22.47 an ounce.